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What happens to my joint marital residence in a divorce?

Dividing a marital home during a divorce? Learn your options, selling, refinancing, or signing a quitclaim deed, and avoid common pitfalls.

One of the biggest concerns in a divorce is often the joint marital residence. What happens to it? If both of your names are on the deed and the mortgage, there are generally a few options. Let’s walk through the possibilities and some common pitfalls to avoid.

Option 1: Sell the House

The first and most straightforward option is to sell the property. After the sale, the proceeds can be equitably divided between both spouses. It’s important to note that “equitably divided” doesn’t always mean an equal 50/50 split. The division of proceeds is based on fairness, which can depend on various factors, such as financial contributions, the needs of each spouse, and the terms of your divorce agreement.

Option 2: One Spouse Keeps the House

If one spouse wants to keep the home and the other spouse agrees, the spouse keeping the house will typically need to refinance the mortgage. This refinance would remove the other spouse’s name from any remaining debt on the property. The spouse retaining the home would also need to compensate the other spouse for their share of the equity. In this situation, the spouse giving up their ownership interest usually signs a quitclaim deed. This legal document transfers their rights, title, and interest in the property to the spouse keeping the home.

Beware of a Common Pitfall: Quitclaim Deeds Without Refinancing

One of the biggest mistakes I’ve seen is signing a quitclaim deed before ensuring that your name is removed from the mortgage.

Here’s why this is risky

If you sign over your ownership of the property but your name remains on the mortgage, you’re still legally responsible for that debt. If your spouse fails to make mortgage payments, the bank can and will come after you, even if you no longer own the property. The bank isn’t bound by the terms of your divorce agreement; they only care about who’s on the loan. So, always make sure the refinance happens before you sign over your interest in the home.

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