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What Happens If the Sale of the Marital Home Is Delayed Until After Divorce in New York?

When a couple in New York state gets divorced, they must go through the process of dividing marital property. In most cases, the home that a married couple lived in will be eligible to be divided. However, there are many ways in which a home can be split in a final divorce settlement such an outright sale or one spouse buying out the other. If the house is to be sold, the sale of a home could be postponed until after the divorce is final.

The Mortgage Contract is Separate From the Divorce Decree

It is important to understand that the mortgage contract that parties to a marriage entered into cannot be modified by a court. This is because the mortgage lender is not a party to the divorce itself. If a person wants to get his or her name off of a mortgage loan, it could be possible to pay off the balance owed on that loan.

This could be done by making a payment to the lender or by selling the house and using the proceeds to pay it off. Alternatively, the other spouse could refinance the mortgage in his or her name only. However, since the sale is being delayed until after the divorce, the only practical solution in this situation is to pay off the loan or ask the other spouse to refinance.

In some cases, the divorce decree will say that the person who retains the home is required to make the mortgage payments on time. Unfortunately, the other borrower could still face negative consequences such as a lower credit score or legal action if payments are not made in a timely manner.

The Mortgage and Deed Are Separate Documents

It is important to know that the mortgage and the deed are two separate things. The mortgage is a loan that must be repaid while the deed lists who has an ownership interest in the home. A person could be on the deed without being on the mortgage while a person could be named on a mortgage without being on the deed. This is important because someone who is on the deed may be entitled to a share of equity in the marital home even if that person isn’t responsible for the mortgage.

How Will Payments Be Credited?

If one person makes a mortgage payment or series of payments prior to the sale taking place, each side may be wondering how to account for those payments. It could be a good idea to simply give the person who made those payments full credit for them when the house is sold. It could also be acceptable to divide the equity built by those payments and split it accordingly after the sale. How the payments are dealt with is something that will ideally be determined while negotiating the terms of the divorce decree.

How Much Is the Home Worth?

Depending on the terms of a divorce decree, one individual could sell his or her interest in the home to the other person on the mortgage. However, it will be necessary to determine how much the home is worth to determine how much will be paid to whoever keeps the house after the divorce. It may also be necessary to figure out whether a divorcing couple wants to base the buyout price on the market value of the home when it takes place as opposed to some other point in time.

Could Only One Spouse Be Entitled to Proceeds From a Sale?

In New York, it is not a guarantee that both spouses will receive a share of the proceeds after a home is sold in a divorce. While a home is generally considered marital property, there are many factors that could influence how much equity an individual could be entitled to. For instance, one person could choose to give up their interest in the home in exchange for more spousal support or for other valuable marital assets.

How Must the Home Be Maintained?

In the event that a home is to be sold after a divorce, it must generally be maintained in a manner that would maximize its chances of being sold. Failure to do so could be seen by a court as wasteful dissipation of an asset. This is generally true even if only one person has a financial interest in the home that is being sold. In some cases, the other spouse could ask that the home be put on the market by a certain date or otherwise ask that it be liquidated quickly even without a financial interest in it.

The Courts May Require Consent of Both Parties Prior to a Sale

In most cases, the fate of a marital home is decided prior to the divorce becoming final. This is because courts don’t want to hear the same case multiple times, which can take time and resources away from other matters. However, if a home is not going to be sold or refinanced prior to the divorce becoming final, both parties must generally give consent before it can be sold after the divorce.

This means that it is critical that both parties to the sale of the home are able to agree to the terms of a deal in an amicable manner. In some cases, this means doing so through mediation or other avenues in which parties are urged to talk through their differences.

If the spouse who plans to sell his or her interest to the other spouse cannot pay cash upfront, a promissory note may suffice. The note should include when payments will be made to the other spouse and when that person will be removed from the mortgage and deed to the house.

Those who are going through a divorce in New York state may benefit from having an attorney on their side. Visiting can be the first step to finding the right attorney to meet a person’s needs and budget.

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