What Happens If the Sale of the Marital Home Is Delayed Until After Divorce in New York?

gated homeWhen two spouses get a divorce in New York, they must address multiple complicated issues, including the equitable distribution of marital property. This often includes the marital home. A divorce agreement, or a court order granting a divorce, usually includes provisions for the disposition of the marital home. The sale of a home might not be practical or even possible at the time of the divorce for a variety of reasons. What happens when a home is to be sold after a divorce? Should the person paying the mortgage get credit for the full amount of the payments or some other amount? As for the person waiting to receive their share of the sales proceeds, should they receive interest in some form? These questions have no easy answers, but they are worth exploring.

Section 236(B)(5)(a) of the New York Domestic Relations Law requires a court to resolve all issues of marital property distribution in, or prior to, a final judgment of divorce, except for issues regarding which the parties have entered into an agreement. Postponing the sale of a marital residence requires careful planning in the hopes of avoiding a return to court. A court is unlikely to approve the future sale of the home without both parties’ agreement, along with a plan for either selling it or otherwise disposing of one spouse’s marital property interest.

Divorcing spouses have several options when postponing the sale. One spouse may buy out the other spouse’s share of the marital interest, either in cash or with a promissory note. This arrangement, along with most other postponements, creates potential problems with a mortgage lender. Any postponed sale means that one spouse must continue making mortgage payments, while the other spouse remains liable for missed payments.

A court cannot bind a mortgage company in a divorce decree, since it is not a party to the case. At most, a court’s order regarding the payment of a mortgage in a divorce decree gives one spouse the right to enforce the other spouse’s payment obligation. If both spouses signed for the mortgage, the bank has a contract stating that both parties are responsible for payment, which the court has no power to modify.

One ex-spouse’s payment of the mortgage increases the total amount of equity, which entitles them to an offset in the final accounting. In Patete v. Rodriguez, 971 N.Y.S.2d 109 (N.Y. App. 2013), a New York appellate court granted a separate property credit for the purchase of the marital residence. Another court held in Belkhir v. Armand-Belkhir, 988 N.Y.S.2d 746 (N.Y. App. 2014), that reimbursement of 50 percent of the payment amount is required when one party pays the other party’s share of marital debt, like mortgage payments.

The other spouse has rights too. One court made a finding of “wasteful dissipation of assets” for delaying the sale of the marital home in Renck v. Renck, 17 N.Y.S.3d 431 (N.Y. App. 2015). Caselaw does not specifically say that the spouse who vacates the marital residence is entitled to interest on their share of the home’s equity, but they do have the right to ensure proper care of the residence and to reasonably prompt efforts to effect a sale.

To learn more about the complexities of the equitable distribution of marital property, or to discuss other issues related to New York property division, contact me, Mr. Darren M. Shapiro, at your earliest convenience. You can contact us online or at 516-333-6555 to schedule your free and confidential half-hour consultation.

More Blog Posts:

Dividing Retirement Savings in New York or Long Island Divorce, Long Island Family Law and Mediation Blog, December 11, 2016

New York and Long Island Divorce and the Home, Long Island Family Law and Mediation Blog, November 20, 2016

Proof of Marital Debt and Divorce, Long Island Family Law and Mediation Blog, November 12, 2016

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