A marital home, or any other real estate such as a vacation home or investment property, is frequently the most valuable asset owned by a married couple. Consequently, how such an asset is distributed upon divorce is of critical financial importance to both husband and wife. If you are concerned about the disposition of your marital home or any other real estate, you should consult Bergen County divorce lawyer Brian D. Iton. He is ready to advise spouses on their rights and options. The significance of these matters makes it essential to enlist the representation of a property division attorney who can protect your interests.
Any property acquired with marital assets during marriage is marital property. In most cases, the home in which a married couple resides will be a marital asset if it is purchased during the marriage. However, in certain cases the purchase of a marital home prior to the marriage, with one parties’ separate money, can make the home a marital asset if the home was purchased “in contemplation of marriage”. Similarly, when one of the spouses uses separate funds to put a down-payment on a home, the court may deem the home marital property if the downpayment was made with the intention that the home would be the parties’ joint marital home. If one party owns the home prior to the marriage and the other party helps the owner pay down the mortgage, there is an argument that the non-owner deserves a credit for their participation in the mortgage paydown. As well, if a non-owner spouse helps an owner spouse improve their property the non-owner may have a claim for their contribution to the improvement.
Spouses have several different options for dividing the value of a marital home upon divorce. These options generally apply to other marital real estate as well. First, they can list and sell the property and divide the net proceeds. As simple as this may sound, there are a number of potential complications with property sales in divorce. The first common point of contention is the list price. A spouse who does not want to sell immediately may push for a higher price to prolong the sales cycle and buy themselves more time in the house. The spouse who wants to unload the property may push for a much lower price so that they can stop paying the mortgage as soon as possible. Second is the timing of the sale. If the children are in school, or are close to graduation, the sale may be delayed to minimize disruption to their schedules. If the property does not sell quickly and remains on the market for an extended period of time a satisfactory arrangement has to be worked out as to who will pay the mortgage and how those payments will be credited between the spouses. Similarly, agreement has to be reached as to which spouse will continue to reside at the property until it is sold. Normally the spouse who resides at the property will have exclusive use and possession of the home. The interplay between the amount of the mortgage payment, and the amount and duration of spousal support and child support will also need to be negotiated. The resolution of these and other related issues can have significant financial ramifications for both spouses.
A second option in dividing the marital property is for one spouse to purchase the other’s equity interest. In most cases, this is done by (re)financing a loan in one spouse’s name, with the other spouse receiving a portion of the equity when the financing is completed at closing. An appraisal of the house is usually done in this situation to determine the property value so that the amount of equity available for division can be calculated. The refinance is usually required to be completed in a set amount of time. If the time period expires without a successful refinance the house is usually listed for sale. A number of issues need to be negotiated in any buyout/refinance of the marital home. The primary issues are: who will make the interim mortgage payments; which party will be responsible for the maintenance costs, repairs and upkeep of the property; what happens if a major system breaks down (e.g. boiler, air conditioning system); also the question of how to allocate property-related tax deductions (e.g., the mortgage interest deduction) has to be negotiated.
Finally, the third (least chosen) option is for the spouses to continue to co-own the property during and after the divorce. If the property is quickly accelerating in value the parties may want to hold on to it for investment purposes and sell it at a later date. Also, if the parties want to continue to live together, to co-raise their children, holding on to the property may be an attractive option. (A minority of couples reconfigure their homes post-divorce so that they can lead separate lives under one roof.)
Continuing to co-own property with an ex-spouse requires a very special post-divorce arrangement. Beyond being able to work together in a general sense the parties will need to agree on how to allocate mortgage costs, upkeep, insurance, management, repairs, and similar matters, as well as determining if and when the property will be sold. If the parties both intend to live at the property during and after the divorce, issues of personal and private space have to be dealt with upfront.
If you have questions regarding how your marital home or any other marital property will be distributed upon divorce, or if you need legal advice or representation in other issues related to family law, contact Bergen County divorce attorney Brian D. Iton for a free consultation. He can be reached toll-free at (844) 431-3380, or through our contact form to set up an appointment. Mr. Iton represents people in Hackensack, Paterson, Newark, Jersey City, and other communities throughout Bergen, Essex, Hudson, and Passaic Counties.