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Family & Divorce Law

No simple answers to questions of mortgages and property division

By Tolison & Williams / November 13, 2015

Dividing marital wealth is a primary concern for most Colorado spouses who are seeking divorce. For those who own homes, the equity in their properties is often the most substantial asset in their marriages. The family homes also hold a great deal of sentimental value for some, which can further complicate matters. When dealing with real estate and property division, there are no easy answers.

In many cases, spouses will agree that one party will retain the family home while the other walks away with a share of the equity in that property. When both spouses have high-paying jobs or are independently wealthy, the matter is simplified. The spouse who retains the home will refinance the property in his or her own name, leaving the other party free to move on and purchase his or her own property, if so desired. Things become complicated, however, if the spouse who intends to keep the home is unable to refinance independently.

The lender wants to be repaid, and many will insist that both spouses remain on the mortgage. This gives the lender the ability to make collection efforts against two people instead of just one in the event that timely payments are not being made. This means that a spouse who agrees to accept other assets in lieu of the family home can still experience negative ramifications if the home goes into foreclosure.

In order to address this risk, spouses should address the matter early in the divorce process. This means determining whether the party who wishes to retain the home can qualify for a mortgage or refinance in his or her own name. If not, some couples will include a provision in the divorce agreement that states that the retaining spouse must find a way to qualify for a mortgage within a certain period of time. The solutions will be different from one couple to the next, but Colorado spouses should rest assured that there are ways to address these essential property division concerns.

Source: The New York Times, "Divorce and the Shared Mortgage", Lisa Prevost, Oct. 30, 2015

Tags: Family Law

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