Oh my, my. This must be the most confusing title we’ve ever written.
But if divorce real estate law were easy, we wouldn’t be writing about it.
Hi. Welcome to money-issue Wednesday.
It’s common these days to find couples who own homes together. But then the couple doesn’t live happily ever after and ends up getting a divorce. If you’re reading this, you may have wondered, “Should the deed be changed?”
In an attempt to answer that question, we’re going to give you advice from two different sites.
The first comes via the Minnesota Courts — Top 7 Mistakes with Real Estate During Divorce. The seven mistakes are (as seen in the article).
|1. Not listing the real estate in the Summons and Petition.|
|This might prevent you from getting a divorce, might prevent you from selling the property until you go back to court to amend and correct the decree, might result in your spouse getting more of a share in that property, and other problems.|
|2. Not using the correct “legal description” for the property, or using the street address instead of the legal description.|
|You may have to amend the Divorce Decree before you can refinance or sell the property.|
|3. Having verbal or written “side” agreements about the property that are not part of the divorce decree.|
|These are not enforceable and if your ex-spouse changes his/her mind, you are out of luck.|
|4. Assuming you are not responsible for the mortgage because your ex-spouse was awarded the house.|
|The court cannot order the lender to take your name off of the mortgage. Being on the mortgage is between you and the lender. Having your name on the mortgage for a house awarded to your ex-spouse may prevent you from qualifying for another mortgage. If your spouse fails to make payments on the mortgage, the lender may try to collect from you.|
|5. Deeding the property between spouses before the divorce is final.|
|Some people think that if their spouse is not listed on the deed for the property, the property does not need to be part of the divorce proceedings. There are two mistakes here. First, all real estate is part of the divorce proceedings, even if the deed is in only one name. Second, a deed between spouses during the marriage is not effective. Under the law, a spouse has a “marital interest” in all real estate owned by the other spouse. You cannot deed away that marital interest while still married to each other.|
|6. Not paying attention to the marital and non-marital parts of the value of a house.|
|You could be short-changing yourself by thousands of dollars.|
|7. Adding or changing language in the divorce papers without consulting an attorney.|
|You should change the court forms to meet your needs, but you also should get an attorney to help you. Real Estate law is very technical and exacting. You are highly likely to make serious mistakes if you try to address the real estate issues without competent legal advice. It is foolish to save a few dollars now and cause yourself trouble and expense later. Some mistakes can be corrected. For example, if you make an error in the legal description of the property, it is possible to go through a procedure to “amend” the Judgment and Decree to correct the legal description. Other mistakes cannot be corrected. For example, if you agree to sell the house and divide the net proceeds 50-50% with your spouse, you cannot ask to amend the decree later on the basis that the division was unfair because you paid $50,000 of the downpayment on the house with your non-marital money. Many attorneys are willing to review divorce papers for a reasonable fee. Just remember to show the papers to the attorney before you sign them or serve them on the other party.|
Make note of all 7 because making any one of them can lead to problems and added expenses later.
If you live in California, you’ll be interested in this response to a question about property listed as community property.
I am recently divorced. My ex and I still own a house together, listed on the deed as community property with rights of survivorship. Is it necessary to change the deed? If so, how should we be listed?
Yes, you definitely need to execute a new deed. Retitling the property will save time, energy and expense later.
In California, community property is a form of ownership exclusive to married couples and registered domestic partners. Because you are divorced, you and your ex can no longer own real estate as community property.
If your property agreement does not specifiy how you own the residence following the divorce, you will need to agree on how to hold title going forward.
If a lawyer assisted you with the divorce, ask him/her to prepare a new deed.
In general, you can own the property as “tenants in common” or as “joint tenants.”
If you own the property as tenants in common, each of you can dispose of your half as you wish now or in your will/trust. This means one of you could co-own the property with someone else at some point.
Also, as tenants in common, you can own unequal interests in the property.
If you own the property as joint tenants, you must own equal interests in the property. Upon the first of your deaths, the other will automatically inherit the decedent’s property share.
Depending on your relationship with your ex and how you plan to use the property, you may want to consider a Tenancy in Common Agreement that sets forth terms and conditions for management, upkeep and use of the property.
An attorney can help determine the best form of co-ownership for your situation, as well as prepare any additional documentation.
How have you handled joint property issues?