A house is usually the biggest purchase most individuals make in his or her lifetime. Many Connecticut residents purchase a home with a spouse, which makes things complicated should the two later decide to divorce. For couples who would rather not see the home sold, there are ways this can be facilitated in a divorce court setting.
Most commonly, if one spouse wants to keep the house, arrangements can be made to ensure an equitable settlement based on that asset being assigned to one individual. This can be accomplished by refinancing the home with only one spouse’s name on the loan agreement. The other spouse can then move forward without concern about personal liability should the other party later default on the refinanced loan.
However, this can be complicated if the refinancing went through in the name of both parties. If one spouse takes responsibility for the loan in exchange for the property title (and, often, with the other party receiving a cash payout or separate marital asset), problems may arise if the spouse subsequently defaults on the loan payments. This could have financial repercussions on the other party to the divorce. Specifically, the bank can still hold both parties financially responsible since both signed the loan documents.
Home ownership is complicated at the best of times, and a divorce is hardly the best of times. Connecticut residents who find themselves in this situation may find it beneficial to learn more about how refinancing works in this state to determine whether this would be the best move for them. There are a variety of options available to those who wish to keep a home after a divorce, though it is important for both individuals to fully understand their rights and responsibilities with regard to these issues.
Source: The Wall Street Journal, “In a Divorce, How One Spouse Can Keep the House”, Anya Martin, Nov. 5, 2014