Mortgage Payments And Divorce

March 16, 2022

Mortgage Payments And Divorce

Divorce can have a dramatic impact on a couple’s finances, especially if their household income is now divided to provide for two separate households. Deciding what to do with the marital home and the associated mortgage can be difficult, especially if the separation is acrimonious. The divorce process and all the legal and financial implications can be complex and overwhelming. If you have questions about mortgage payments and divorce, consider contacting an experienced family lawyer at Johnson Law Group by calling (720) 463-4333.

Leaving the Marital Home

During a divorce, it is common for one spouse to leave the marital home while the other remains in it. However, courts often like to maintain the status quo. Therefore, if one spouse leaves the property, they may be less likely to be awarded possession of the home during the divorce later in the process. Before leaving the marital home, consider contacting Johnson Law Group and discussing the matter with a knowledgeable family lawyer who can discuss the pros and cons of leaving.

Possession of the Marital Home During Divorce

Under Colorado, Revised Statute §14-10-108, either spouse can request temporary orders from the court for any of the following while the divorce case is pending:

  • Payment of debts
  • Use of property
  • Maintenance
  • Child support
  • Spousal maintenance
  • Parental responsibilities
  • Payment of attorney fees

If the court issues a temporary order regarding the marital residence, the spouses can be informed which spouse will have the right to continue to occupy the property and who should pay the mortgage.

Mortgage Payments During a Divorce

Under Colorado Revised Statute §14-10-107, once a divorce complaint is filed, an automatic injunction applies until the end of the case. This automatic order restricts either spouse from taking any of the following actions without the court’s order or the other spouse’s permission:

  • Transferring, getting a mortgage or lien on, or disposing of any marital property except in the usual course of business
  • Harassing the other spouse
  • Removing their minor children from the state
  • Canceling, modifying, terminating, or allowing a lapse due to non-payment of any insurance policy held by either spouse, including homeowner’s, renter’s, health, life, or auto insurance that covers either spouse or names the other or their minor child as a beneficiary of the policy

While neither spouse has the right to sell the marital home without the other’s consent, mortgage payments will continue to be due during the process. If both spouses are listed on the mortgage, they both will remain financially responsible for making the mortgage payments. Even if there is a court order that says one of them is responsible for making the payments, both continue to be contractually obligated to make mortgage payments until the mortgage is changed. This is true even if one spouse has left the marital home. If one spouse refuses to make payments toward the mortgage, the other is still responsible for the payment, regardless of the divorce process.

Options for the Marital House in Divorce

There may be many options for dealing with the marital house during a divorce. The decision you make may depend on factors, such as how the property was financed and titled, your preference, your spouse’s preference, your credit rating, your spouse’s credit rating, and the amount of equity in the home.

Here are a few options to consider:

Keeping the Home and Mortgage As Is

The easiest solution may be to keep the house and mortgage as-is. One spouse may move out of the home and the other spouse may be responsible for making the mortgage payment. This option comes with potential drawbacks, such as the spouse not living in the home still maintaining an ownership interest in the home. If the spouse continuing to reside in the home falls behind on mortgage payments, this can negatively affect the credit of both spouses.

Keeping the Home, Changing the Mortgage

If one spouse wants to keep the home but they do not want the other spouse to remain on the deed or the other spouse does not want to remain technically liable for the debt, it may be possible to keep the home while changing the mortgage.

During this process, the spouse wanting to stay in the home will usually get a new mortgage in their name alone. They pay off the old mortgage and buy out the other spouse’s share of the equity in the home. This will make it so that the other spouse is no longer obligated to make mortgage payments, and it may be easier for them to get a mortgage in their own name in the future. The spouse remaining in the property will also want to remove the other spouse from the deed so they no longer have ownership interest int the property.

Renting Out the Property

If the spouses want to keep the home but neither one wants to live in the home, they may choose to rent out the property. They may have to reach decisions regarding various aspects of this arrangement, such as:

  • How long the spouses want to rent out the property
  • How to find reliable tenants
  • Who will be responsible for the maintenance
  • How much to charge in rent
  • How the rent will be divided between the spouses

Selling the Property

The most practical decision for many spouses regarding mortgage payments and divorce is to sell the house, especially if neither spouse is in the financial position to pay for the property on their own.

The steps to sell a property during divorce, whether by agreement or with the court’s order usually consist of the following:

Determine the Value

The couple can obtain the estimated value of the home through a real estate agent who uses comparable sales in the area to determine the value, or they hire a professional appraiser.

List the House

The couple will usually list the house with a professional real estate agent.

Accept an Offer

The couple agrees to accept an offer from a buyer.

Pay Off Mortgage

Once closing is completed, the existing mortgage and any other encumbrances will be paid off.

Split the Proceeds

The spouses will split whatever remaining proceeds between them, equally or by some other fair division.

Pay Capital Gains Tax

If the profits of the home sale exceed a certain amount, the spouses may be responsible for paying capital gains tax, according to the Internal Revenue Service.

Contact an Experienced Family Law Attorney For Help Determining Your Options

The challenges of a divorce, both emotionally and financially, can feel overwhelming. The family home is one of the most important considerations for spouses during the divorce process. If you have any questions about your home options, mortgage payments, or any other questions regarding your divorce, consider contacting an experienced family lawyer at Johnson Law Group to ensure your legal and financial rights remain protected at (720) 463-4333 today.

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Written by Family Law Attorney Myles S. Johnson
Divorce doesn’t have to be dramatic. For the litigants, losing your spouse is significant enough. But you can choose the way it affects your daily life. The only guarantee I can give is that the feeling that you have right now will not be the feeling you end with. This is a season in your life, and it must be approached that way.
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