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New York divorce and real property: there's more to this story

When deciding how to divide the marital property during the divorce, there are some assets that while emotionally may be hard to part with are a little easier in application to split. For instance, a couple may argue over the expensive china or the antique table, but once a decision is made the property goes with the spouse.

Other assets require a little more attention even after the property decision is made. One such asset is real property. Whether it is an apartment in Manhattan or a second property upstate, there are more considerations than who gets what.

In some instances, a couple will decide to simply sell the property and split either the profits from the sale or the liability that remains. Since 2008, selling the home is not always the most optimal choice or even a real possibility.

In cases in which selling is not ideal, one spouse might agree to take on the responsibility of the mortgage and residency rights. Even though the divorce agreement is enforceable in court and clearly states the obligation, one can't forget about the mortgage.

The divorce settlement does not affect the terms of the mortgage. If the spouse under the settlement obligation defaults, the other spouse is still liable for the debt and the consequences. So while loss of the property to foreclosure may not matter in that the second spouse no longer resides there, it will fall right into their credit history, affecting their score and financial future.

This isn't to say that a couple should avoid keeping the home; it is simply a decision that requires a little follow-up. For instance, an interspousal transfer grant deed, refinancing or assumption are all options for resolving the issue. Which one is best? The answer lies with a discussion with a divorce attorney who can enlist the aid of third-parties who can help a client make the best decision for their individual situation.

Source: Loan Safe, "Mortgage Options While Going Through a Divorce," July 15, 2013

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