| background |
What happens when a house is 'under water' or 'upside
down' and the owners want to divorce?
Whether to keep a house with no equity or 'negative' equity is a
complex financial decision, even absent divorce. The options
include: (1) sell the property and pay the deficiency out of pocket;
(2) attempt a 'short sale,' in which the lender takes all proceeds in
full satisfaction of the secured debt; (3) let the property go to
foreclosure; or (4) have one or both parties stay in the property,
pay the mortgage, and await better market conditions.
A sale can be court-ordered under Maryland law. However, there
appears to be no statutory provision for deciding who pays any
deficiency.
In 1989, the Court of Special Appeals (Maryland's intermediate
appeals court) pointed out, "At common law, the court may not
require one spouse to satisfy joint obligations of the parties such as
mortgages and taxes on real property, ... or pay the interest on
joint promissory notes." The Court recognized specific statutory
exceptions, including mortgage payments for property subject to an
order for use and possession.
If the parties have minor children, use and possession of the family
home, as well as family use personal property, may be awarded to a
parent with custody for up to three years from the granting of an
absolute divorce. During the period of use and possession, the
mortgage and other carrying costs may be apportioned between the
parties.
In addition, a provision added to Maryland law in 2006 permits a
court to order transfer of ownership of the principal marital
residence from one party to the other, or to authorize one party to
purchase the residence from the other on court-ordered terms.
Unfortunately, these added powers are infrequently of any use when
a house is 'under water.'
Limitations on court-ordered remedies place a premium in these
situations on mediated or negotiated agreements between parties.
NOTICE: None of the contents of this page constitutes legal advice.
To obtain legal advice, consult with an attorney. This is especially
important in divorce and family law matters, in which outcomes are
often peculiar to the particular facts and circumstances of the case.
| Recession and Divorce: House 'Under Water' |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| Meiselman & Helfant, LLC 29 Wood Lane Rockville, Maryland 20850 301-279-8840 Fax 301-279-9630 E-mail: info@mdfamlaw.com |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| Contact Meiselman & Helfant, LLC Today Call 301-279-8840 |
| Meiselman & Helfant, LLC |
29 Wood Lane, Rockville, Maryland 20850
| Call 301-279-8840 |
| Serving Bethesda, Chevy Chase, Gaithersburg, Germantown, Kensington, Potomac, Rockville, Silver Spring, Wheaton, Montgomery County, Prince George's County, Frederick County, and Howard County. |
| © 2002-2009 Meiselman and Helfant, LLC. All rights reserved. |