Know About Your House During Divorce
Divorce proceedings may be a trying process that is rife with anxiety, worry, and ambiguity. Things might quickly become problematic if you have children or substantial marital assets. You can be in danger if you don’t have a knowledgeable and professional divorce lawyer on your side.
We’ll dispel common misunderstandings and offer some helpful guidance on divorce in North Carolina in this blog post. Discover some crucial details concerning your house during the divorce procedure in North Carolina by continuing to read.
1. Paying up the mortgage loan in joint names is, for the most part, the only option to “remove” your name from it.
The person moving out of the house still retains the mortgage debt on their credit record as an ongoing debt even though they are no longer living there when spouses separate and the mortgage obligation is in joint names. Not just the spouse who continued to live in the home, but both spouses are affected when mortgage payments are past due. Generally speaking, lenders won’t take someone’s name off of the mortgage note. Paying off the mortgage loan is the customary method by which divorced spouses get one named “removed” from the debt.
Refinancing the debt or selling the house and utilizing the cash to pay off the mortgage are the two major ways to pay off a mortgage. When a divorce occurs, a refinance typically refers to the process of paying off the previous mortgage in both names by the spouse who retains the home when they obtain a new mortgage or home equity loan in their sole name.
2. The names on the mortgage loan and the names on the deed may not match.
People frequently are unaware that their mortgage obligation and their ownership rights to real estate may differ. A deed, as most people know, gives the buyers ownership of the property. On the other hand, the mortgage is a promissory note that either or both property owners may sign. The bank or mortgage lender may choose to make the loan in the name of only one property owner rather than both, even if the deed shows that there are two owners.
This may occur if the other owner works for themselves and receives inconsistent or erratic pay. Occasionally, the co-owner may have poor credit or a high debt to income ratio, meaning they have too many debts relative to their income. Even though both spouses may own the property jointly, only the one who signed the mortgage note is legally obligated to make the payment of it.
The mortgage note in North Carolina is backed by a deed of trust that is registered with the Register of Deeds. It is the real lien that is placed on the asset. Occasionally, the spouse who isn’t in charge of making mortgage payments signs the deed of trust, enabling the lien to be put against the property in which they have ownership rights. It is not a given that the other owner is liable for debt repayment just because they signed the deed of trust. Put another way, unless we see the mortgage note, we normally are unable to determine whether the other owner is liable for the mortgage payment.
3. For the other spouse, there is very little protection when one of them “assumes” the joint mortgage.
When one spouse consents to formally “assume” payment of a mortgage that is registered in both of their names, it signifies that one spouse is taking on the burden of making the mortgage payment. It’s a contract that can only be signed by the couple. Both spouses are still legally required to repay the loan because a joint mortgage includes a mortgage note that they have both signed. The bank, acting as the lender, and the spouses, acting as the borrowers, have an agreement known as the mortgage note. Until the initial mortgage is paid off, spouses cannot simply alter the conditions of the mortgage note they signed. Contrary to popular belief, there isn’t actually a primary and secondary mortgage obligation. Due to the joint and several liability laws in our state, a lender may choose to collect 100% of the debt from one spouse alone, or any portion from each spouse.
4. The rights to joint ownership alter upon the issuance of a divorce decree.
In North Carolina, joint accounts are frequently used by married couples to purchase a home. Tenancy by the entirety (TBTE) is the name given to this type of ownership. Each spouse now owns 100% of the house, as opposed to 50% each. The widow or widower immediately becomes the sole owner of the property upon the death of their spouse. However, the owners are no longer married when a judge issues a divorce judgment, and their TBTE ownership suddenly transforms into joint ownership as tenants in common.
In that case, each owner has a fractional ownership share, such as 50/50, and the person specified in the deceased owner’s will or next of kin inherits that owner’s ownership share. The next of kin of the deceased owner may divide ownership with the divorced owner who is still alive.
5. You could be responsible for a monetary judgment if your home is foreclosed upon.
Foreclosures are not uncommon in these economic times. In a foreclosure, the lien on the property is enforced by the lender as per their deed of trust. The lender takes title of the property legally, rather than the parties receiving mortgage payments for a residence they own. In certain cases, this concludes the tale. At times, the lender may try to sell the property but wind up receiving less than what was originally owing.
Frequently Asked Questions About House Asset during Divorce
1. What is considered marital property?
Marital property generally includes assets acquired during the marriage, but laws may differ on specifics.
2. How is the family home typically handled?
Options include selling and splitting proceeds, one spouse buying out the other, or co-ownership for a period.
3. Can one spouse keep the house after divorce?
Yes, it’s possible through negotiation, but financial arrangements need to be made, like refinancing or offsetting other assets.
4. What role does a prenuptial agreement play in property division?
A well-drafted prenup can outline asset division, including the fate of the family home, providing clarity during divorce proceedings.
5. How are mortgage and debts handled during divorce?
Both spouses may remain responsible for joint debts, and decisions about the mortgage should be addressed in the divorce settlement.
6. Can a spouse claim a share of the home if they didn’t contribute financially?
Contributions can be financial, but also non-financial, like homemaking. Courts consider various factors in property division.
7. What if the house is owned before marriage?
Pre-marital property may be considered separate, but factors like using marital funds for its maintenance could impact its status.
8. How can a divorcing couple determine the house’s value?
Professional appraisers or real estate agents can provide fair market value assessments to guide negotiations.