In many North Carolina divorce cases — especially those involving children — one party decides he or she wants to keep the marital home. Ensuring an equitable distribution when one spouse is keeping the home can be a challenge. A divorce decree is often not enough to convince a lender to release one of the parties to the mortgage note.
As long as the names of both parties are on the mortgage note, the lender will typically look to both of them for payment. It may not be a good idea to sign any paperwork transferring ownership of the home to one spouse without first being released from the mortgage and note. Usually, the individual keeping the home is required to buy out the other party pursuant to an agreement and/or court order.
How much money that party may receive largely depends on the value of the home at the time of the divorce. It may also depend upon what other marital assets exist and what proposals are made by each party to divide their property. Many times, these issues are subject to the give and take of divorce negotiations, usually focused on arriving at an agreement that addresses these issues with consideration for the rights of both parties.
When a North Carolina court considers the equitable division of marital assets and liabilities, it may consider a range of options in order to arrive at a decision that is fair to both parties. Of course, the parties retain the right to reach an agreement between themselves, and the court will typically ratify such an accord as long as it does not violate public policy and is deemed fair to both sides. When one party retains the marital home while the other continues to be obligated with respect to the mortgage documents, binding arrangements may need to be included in the agreement. For instance, a deadline may be established for the party keeping the home to obtain new financing, along with defining what is to happen if that deadline is missed. That way, if the person keeping the house does not comply with the terms of the agreement, the financial interests of the other party can still be protected.
Source: Fox Business, “How to Divide Your House in a Divorce“, , July 14, 2014