The marital home is a common point of contention for couples in New Jersey going through the divorce process. In some cases, the fight is so bitter that courts get involved and end up ordering the property sold and the proceeds split. Other times, one party may agree to let their soon-to-be-ex buy them out so that they can keep the home. Even if the best intentions are behind such a move, there are some potential legal issues associated with arrangements like this.
With property division involving a home, there may be unforeseen legal obligations. This is why it’s often advised that the spouse seeking or receiving the home determine the amount of equity associated with it. If the property is jointly owned, one spouse may be able sign the home over to the other party with a quit claim deed.
However, signing over ownership rights with this type of document may not include loan responsibilities, which could result in unforeseen problems for the spouse who gets the home. For example, if an ex fails to make their part of the payments, the other spouse’s credit rating could be negatively affected. Changes in property value or unexpected upkeep expenses could also be problematic.
To minimize risks when transferring ownership, the purchasing party is typically advised to proceed as if they were dealing with a complete stranger. Doing so makes it easier for all home-related costs to be discovered and fairly split before ownership changes. This approach to property transfer typically involves obtaining a new loan for the home, checking for hidden liens and debts, having a home inspection and property appraisal performed, and reviewing total costs such as escrow, title and new lender fees.
During the property division process, an attorney may be a valuable ally. For instance, a lawyer may be able to help a client seeking the marital home identify tax consequences they may not have been aware of so that a well-informed decision can be made before proceeding with a property transfer. However, changes with property ownership covered in a divorce decree do not override existing creditor obligations for both parties.