Pennsylvania residents who are planning to divorce may wonder what to do with the family home, especially if there is a mortgage involved. The marital home tends to be one of the most contested marital assets. Dividing the house can be complicated, especially if the people disagree on the amount of equity or what would be a fair buyout amount. There can also be issues that arise if one person wishes to buy a new home during the separation period or if both people remain on the loan after the divorce is finalized.
A person who wishes to purchase a house before the divorce is finalized will need the other person to sign documentation agreeing to give up any interest in or claim to the property. This is typically accomplished using what is called a quitclaim deed.
After the divorce is finalized, issues sometimes arise when one ex-spouse wishes to buy a new house but both are still listed on the mortgage of the marital home. The problem is that the loan still shows up on the person’s credit report. Each person is legally required to ensure that the bank gets paid even if the divorce decree places responsibility on only one person. Until the loan is paid in full, the lender is allowed to collect from anyone named on the loan. The other person’s failure to pay can destroy a person’s credit. The only way to avoid this issue is to sell the house to a third party or for one ex-spouse to refinance the property as an individual loan.
Divorce can be complicated, especially when there are assets with great financial or sentimental value such as a long-term home. A family law lawyer may be able to help negotiate division of these assets.
Source: credit.com, “How to Divide Your House in a Divorce“, Scott Sheldon , July 09, 2014