My STBX and I both have our names on the house, and we both agree that she should keep the house. However, I am concerned that she will struggle to pay the mortgage, and if she is forced to foreclose then my credit is ruined as a result. Will she be required to obtain refinancing in her own name (the time period I assume is negotiable) or force the sale of the house if she can not get refinancing within the time period negotiated?
As a note, she does not make enough money or have the credit to obtain financing. She claims she can make it work but I am still unsure. What are your thoughts?
You have identified the primary issue with not fully resolving the real estate title and debt in the initial divorce – the potential for default, foreclosure, and related adverse impact on the innocent ex-spouse. My general advice as to jointly held property and debt is to refinance or sell the property and resolve the debt prior to the entry of the divorce judgment. While the divorce judgment can be drafted to set forth provisions, contingencies, and deadlines for resolving the jointly held property and debt post-judgment, often one or both ex-spouses lose interest in cooperating in implementing the provisions once the divorce is entered. Similarly, there is less leverage to get the other spouse’s cooperation post-divorce short of more court proceedings. If the lender will not remove you from the note and release you from the mortgage at the time of divorce, and it is clear that your wife will not be able to refinance the debt in her own name, then you should review putting the property up for sale immediately or whether you can assuming the property and refinance in your sole name. Even if you do not want to live in the house, if you can refinance the debt and hold the property for future sale or turn it into a rental property that may be preferable to risking her failure to make the payments – not just the mortgage, but taxes and utilities that are also liens on the property.
Allowing her to assume the payments at the risk of foreclosure is particularly risky in that you will not necessarily be notified if she falls behind on the payments, as the notices usually will go to the house. By the time you find out she has not been making the payments, it may be too late to make up the payments or redeem the property. If you find you must agree to let her live in the house and make the payments, you probably should not transfer the title to her until she refinances the debt into her own name and notify the lender of your new address for any notices. You should review the various options with an experienced domestic litigation attorney, such as the Cordell & Cordell offices in your state.
Richard Coffee is a Litigation Manager in the Belleville Illinois office of Cordell & Cordell. He is an experienced divorce attorney whose practice is devoted to domestic litigation. He is licensed in the State of Illinois and is admitted to practice law in the U.S. District Courts for Northern, Central and Southern Illinois.
Mr. Coffee has extensive domestic litigation trial experience representing clients in courts throughout Illinois on all aspects of domestic litigation, including the representation of clients who are current or retired military personnel with issues under the Soldiers and Sailors Civil Relief Act and the Uniformed Services Former Spouses’ Protection Act, clients involved in state court jurisdictional disputes due to the relocation of one or both parties from or to Illinois, and clients with government or private pension benefit valuation and division issues.