How Divorce Affects Real Estate Ownership: What Happens to Mortgages and Titles?
Are you contemplating divorce with real estate involved?
Divorce can be one of the most challenging experiences in a person’s life, especially when it involves significant financial decisions. One area that’s often a point of contention during divorce proceedings is real estate ownership.
Property ownership and the associated mortgages and titles can lead to confusion, especially when determining who will keep the house or how the financial burden will be shared.
Handling real estate challenges during a divorce can be tricky, but understanding how mortgages and titles are affected is key to keeping the process smooth and stress-free.
At David Morales Group, we understand how complicated the intersection of divorce and real estate can be. We help each divorcing party preserve the ability to retain property ownership - the key to moving forward - and own a right-sized home following a divorce.
We assist family law attorneys and mediators in completing the case file with respect to any real estate involved in a divorce. If you need help with reducing conflict and preventing post-divorce disputes in Southeast Florida, including Palm Beach, Broward, Miami-Dade, and Monroe Counties, call our divorce real estate specialists today.
How Real Estate Is Handled
The first thing we need to address is how real estate is generally handled in a divorce. In Florida, marital property is divided according to equitable distribution.
This means that the property, including real estate, won’t necessarily be split 50/50, but rather in a way that’s fair based on several factors, such as the length of the marriage, the contributions each spouse made to the property, and the financial standing of each individual. The division can affect the title, ownership, and any debts tied to the property.
What Happens to the Mortgage in Divorce
A key component of real estate ownership is the mortgage. When a couple divorces, the question of who will continue to pay the mortgage becomes critical. If both spouses’ names are on the mortgage, the debt will typically remain in both names, regardless of who stays in the house. There are some options for handling the mortgage in a divorce.
Refinancing the Mortgage
One way to handle the mortgage is for one spouse to refinance the loan in their name alone. This allows the spouse who keeps the house to assume full responsibility for the mortgage. However, refinancing may not always be an option, particularly if one spouse isn’t financially stable enough to qualify for the mortgage on their own.
Selling the House
In some cases, both spouses may agree to sell the property and divide the proceeds from the sale. This can alleviate the mortgage burden and move forward without lingering financial ties to the property.
One Spouse Keeps the House
If one spouse keeps the house, the other spouse may be compensated through other assets, such as retirement accounts or a larger share of other property. However, the spouse who retains ownership must also take on the mortgage payments, and they should consider whether they can afford to make those payments alone.
Who Owns the Property After Divorce
The title of the property must also be addressed during divorce proceedings. Whether it’s a marital home or an investment property, the title will need to reflect the new ownership structure once the divorce is finalized. This step is crucial for verifying that one spouse doesn’t retain any claim to the property once they’ve been financially compensated for their share.
Transferring the Title
The process of transferring a property title depends on the agreement reached during the divorce. The title can be transferred to one spouse by signing a deed of transfer or by using a quitclaim deed, which relinquishes any claim the transferring spouse has on the property.
If the couple decides to sell the house and divide the proceeds, the title will naturally transfer to the buyer.
Both spouses must review the title transfer process to avoid future disputes or complications. An improperly transferred title can lead to ownership issues down the road.
Considering Jointly Owned Properties
For jointly owned properties, the process becomes a bit more complicated. If both spouses jointly own a property, they need to decide who gets to keep the property or if the property will be sold. If the property is being sold, the proceeds will be divided according to the divorce settlement. There are a couple of options for handling property ownership:
Property under joint tenancy: If the property is under joint tenancy, one spouse can buy out the other spouse’s share of the property. This is often done if one spouse wants to continue living in the home. The spouse who stays in the house would pay the other spouse’s share of the property value.
Property under tenancy in common: If the property is held as tenancy in common, the divorce settlement may include provisions for each spouse to keep their respective share of the property. This may require one spouse to buy out the other, or the property may be sold with the proceeds split.
When One Spouse Doesn’t Want to Leave the Home
In some cases, one spouse may be unable or unwilling to leave the house. This can lead to conflicts and potentially affect the divorce process.
If this happens, the other spouse may need to consider legal action or file a motion in court to request a fair division of property and mortgage responsibility. In certain cases, the court may rule on who gets to stay in the house, based on factors such as the needs of any children or the financial situation of both parties.
The Impact of Divorce on Property Taxes
Property taxes are another factor that should be considered when going through a divorce. In Florida, property taxes are typically paid based on the ownership of the property.
When a divorce occurs, the taxes may need to be adjusted according to who retains ownership of the property. If one spouse decides to keep the house, they’ll assume responsibility for the property taxes.
If the couple decides to sell the house, the property taxes will be paid from the sale proceeds before the division of any remaining funds. It’s important to account for these taxes when making financial decisions regarding the property.
Dealing With Other Real Estate Assets
While the marital home is often the most significant property that requires attention during a divorce, it’s not the only asset that may need to be addressed. Other real estate properties, such as vacation homes, rental properties, or investment properties, will also be subject to division during the divorce.
Selling or Dividing Rental Properties
If the couple owns rental properties, they may agree to sell the property, or one spouse may buy out the other’s interest. In some cases, both spouses may retain ownership of the property and continue to receive rental income, but they must agree on how the income is divided.
Dealing with Vacation Homes or Second Properties
For vacation homes or second properties, the division depends on whether the property is considered marital or separate property.
If the property was purchased during the marriage, it’s generally considered marital property and will be subject to division. However, if the property was owned by one spouse before the marriage, it may be considered separate property and not subject to division.
Considerations for Properties Held in Trust
Some couples may have real estate held in a trust, which adds another layer of complications when dividing property during a divorce. If a property is held in a trust, the terms of the trust will need to be reviewed to determine how it’s handled in the divorce. In some cases, the trust may require the sale of the property or the distribution of proceeds to the beneficiaries.
Divorce Real Estate Professionals
In many cases, the divorce real estate professionals at David Morales Group can help couples work through the challenges of property division. Whether it’s determining the value of the property or helping to negotiate the sale of the home, we can offer valuable advice during the divorce process with matters like:
Appraisals: We offer property appraisals to accurately determine the current market value for a fair and equitable division of assets.
Guiding property sales: If the property needs to be sold, we can list the home, negotiate offers, and make sure the sale goes smoothly.
Providing advice on rental properties: For rental properties, we provide guidance on whether it’s better to sell or retain the property as an investment.
Working with an experienced divorce real estate firm like ours is the best way to make sure that you equitably split your property holdings during a divorce.
Reach Out to Divorce Real Estate Professionals
Divorce involves many complicated financial decisions; real estate ownership can make the process even more challenging. At the David Morales Group at Brickell Brokers, we can help you deal with the challenges divorce brings to your real estate ownership, mortgages, and titles. We serve Florida residents in Palm Beach County, Broward County, Miami-Dade County, and Monroe County. If you’re going through a divorce and have questions about your property, schedule a consultation today.
