One of the issues that is often times the most concerning to people going
divorce is the
family home. After all, not only is it the place where more memories and important
events occurred than any other for your family but it is most likely the
largest financial investment and asset that you can claim. When you combine
matters of the heart and matters of the wallet you can see why this subject
leads many people to worry that it is being handled correctly in the context
of a long and difficult divorce case.
If the family home was purchased during the course of your marriage then
it is very likely
community property. Community property has no one owner- it is jointly owned by you and your
spouse. The specific proportion of ownership and its impact on your divorce
is unique to your situation, but the point is that it will be up to you
and your spouse to divide ownership of the home in your divorce or have
the judge do so.
It is likely that your divorce will settle prior to entering into a trial.
This means that you and your spouse will be in control of the terms of
your marital split. When it comes to your house there are really only
three ways to resolve its ownership: either you will remain in the house
and your spouse will leave (or vice versa) or the house will be sold and
the equity will be split between the two of you in some manner. For the
sake of today’s blog post let’s limit the possibilities to
the former of those two- with one spouse remaining in the home and the
other leaving to live elsewhere.
What to do about the mortgage
Unless you and your spouse can count yourselves among the very few that
own your home outright, it is likely that there is
mortgage on your home that you make payments on. That mortgage is held by a financial
institution of some sort- your credit union, bank, mortgage company or
other entity. Supposing that you and your spouse agreed to have you remain
in the home and he or she to move, there are specific steps that can be
taken to ensure a smooth and relatively pain free transition is accomplished.
The debt that is owed to the lending company is secured by a mortgage against
your home. Even though your divorce decree may free your ex-spouse of
liability from making payments on the mortgage moving forward this will
not suffice for purposes of freeing him or her from responsibility in
the eyes of the mortgage company. After all, you both agreed to have your
names listed on borrowers and are liable for the debt as a result. Even
if your spouse has conveyed their ownership interest in the home to you
in a Special Warranty Deed this still does not clear him or her of their
responsibility to pay the mortgage.
Suppose then that you fall behind on your mortgage payments. What recourse
does your ex-spouse have against you to protect their interests? With
their having ceded all property rights in the home to you it would seem
that they are in a no win position. If the bank would foreclose on your
home and sell it, there is a possibility that it could sue both you and
your ex-spouse in order to make up any deficiency as far as the difference
between what the home sold for and the amount of money lent to you initially
to purchase the home.
A Deed of Trust to Secure Assumption as a means to tie up the loose ends
of your home loan
What will likely happen in your divorce is that your spouse’s attorney
will request that a
Deed of Trust to Secure Assumption is executed upon the conclusion of your divorce. This document will protect
your ex-spouse from a default on the home loan that occurs if you fail
to make timely payment in the future. You can think of a Deed of Trust
to Secure Assumption like a second mortgage on the home- it allows your
ex-spouse to re-enter the picture and take back the home if you do not
pay the mortgage in a timely fashion each month. You are assuming the
obligation to pay the mortgage and the deed of trust secures that responsibility for you.
Your spouse will want to contact the mortgage company as soon as possible
after the divorce to notify them of his or her right as granted by the
Deed of Trust to Secure Assumption. The reason being is that he or she
will need to sue for foreclosure prior to the mortgage company or risk
having their lien wiped out by the mortgage company’s foreclosure process.
Although the Deed of Trust to Secure Assumption is a method to protect
your spouse’s rights, it is not without its drawbacks. For instance,
if you do fall behind on your mortgage then your spouse will need to go
through the foreclosure process him or herself, make all past due payments
in order to get the loan current and then attempt to sell the property
to get all the money back that he or she spent during the process. If
this doesn’t sound ideal to you I can’t say that I disagree.
However, in exchange for your getting the house of the divorce it is the
protection that is offered to your spouse. The same is true if you are
the spouse who no longer is to reside in the home.
Questions on Deeds of Trust to Secure Assumption? Contact the Law Office
of Bryan Fagan
The process that we just described probably seems more akin to what a real
estate attorney would be discussing rather than a
family law attorney. With that said, divorce cases tend to blend together multiple
areas of a family’s life and real estate is one such area. As a
result, having an attorney who can advocate for your rights and protect
your interests is crucial.
The attorneys with the
Law Office of Bryan Fagan represent clients across southeast Texas and would be honored to speak
to you and your family about doing the same for you. A free of charge
consultation with one of our licensed family law attorneys is only a
phone call away.