During many divorce proceedings in Connecticut, the process of property division takes center stage. For a lot of couples, issues concerning how to handle the family home become paramount. While some couples will agree to sell the house and split the proceeds as a part of their divorce agreement, this option is not so simple in a real estate market that has yet to recover from the recent crash.
In some cases, the parties will negotiate which spouse will retain the family home. This decision can be easy for some families, especially when children are involved and the focus is on keeping their home environment as consistent as possible. However, spouses should understand that even when the decision may seem relatively easy, the financial implications for such a choice can be much more complicated.
One example lies in situations in which both spouses are obligated on the existing mortgage, but the divorce documents order the party that will not retain the home to sign a quitclaim deed that cedes all claims of ownership of the property to the other party. The spouse who gives up the house could end up with significant credit issues if the other spouse does not make the payments as agreed upon. In that scenario, credit damage could occur.
One solution involves making sure that one’s divorce paperwork requires that the spouse who will retain the family home must refinance it in his or her name, alone. If this is not possible, language can be included that stipulates the rights that the other spouse will have to pursue the non-paying party for failure to pay. These and other options are available to Connecticut spouses before the divorce is finalized, and should be fully explored and negotiated in order to protect the financial interests of all involved.
Source: Chicago Tribune, “In divorce proceedings, careful disposition of real estate is vital,” Ilyce Glink and Samuel Tamkin, Oct. 18, 2012