Overview of Divorce and Partition
In a divorce, your home must be dealt with through a process called equitable distribution. In equitable distribution, the house will be awarded to one of the spouses. They transfer the property to you and you pay out your spouse their share of the equity, or vice versa. Alternatively, you could agree to sell the home. In the worst-case scenario, if you cannot agree who gets the home, the court may require the home to be sold through a process called partition. The debts of the marriage will be paid off. If there is any remaining money, it will be split between you and your spouse.
Partition: Deed vs. Mortgage
Your home has both a deed and a mortgage (if you have not paid it off already). A deed is a document that entitles a person to a right in the home and to the home. A person may be on a deed as a way to avoid probate. For example, a mother may add a son to the deed so that the property may pass to the son upon the mother’s death. In other cases, a married couple each put their name on the deed to demonstrate that the property is jointly shared by both of them.
A mortgage, on the other hand, is the contract for responsibility to pay the debt owed on the property. The mortgage is the total debt owed and most people make monthly payments on the principal balance, the interest rate, and often the property taxes and homeowners’ insurance (also known collectively as escrow). If you are listed on the mortgage, this does not necessarily mean you are on the deed. If you are listed on the deed, you may not be on the mortgage. It is important to review both documents individually to see what your name is listed on.
Partition: Transfer the Property
In most cases, property can be transferred by signing a document called a Quit Claim Deed. You should meet with a real estate attorney who is knowledgeable and experienced in preparing Quit Claim Deeds. The Quit Claim Deed will transfer the property from both of your names into one of your names. Then, the document is filed in your county’s property records and one of you will become the official owner of the property.
Seems simple, right? It could be. However, it could also be problematic if there is equity in the property. If you purchased the property for $200,000, but now the property is worth $275,000, your ex may believe they should receive a portion of the equity in the increased value of the home. In our example, in a Florida divorce if the house was purchased during the marriage, a spouse could be entitled to half of the equity of the home or $37,500 (equity of $75,000 divided by 2). A spouse may not want to transfer the property to you without some compensation.
The other problem could arise if your ex is on the deed and the mortgage. It would not make sense for your ex to sign off on their rights to property, but then still be responsible and liable for owing money on the property they no longer have rights to. Any good lawyer would advise against signing off on the title to the home if the person is still obligated on the mortgage.
Partition: Refinance the Property
In addition to the property transfer, a spouse may sometime have to refinance the property in order to remove the other spouse’s name from the property. The person who is going to keep the property will need to refinance the mortgage and refinance it into their name only. The person who is going to refinance will need to make sure their credit score and credit history are in good shape before trying this option. Additionally, the person keeping the house is going to need to have a solid work history (at least two years at the same place), copies of their tax returns, and proof of their paystubs and income. An organized person with all their financial documents ready to go is a much better candidate for refinance.
Partition: Agree to sell the property
While not a popular idea, if neither spouse can pay off or refinance the mortgage, another realistic option is to agree to sell the property. Selling the property will then allow you to pay off the mortgage and sever all ties between you and your ex. If you are no longer financially tied through a mortgage, you can walk away with a fresh start. When you sell the property, the mortgage gets paid off and the deed will transfer to the new owners. This is an opportunity to address both issues (deed and mortgage) through one transaction.
In addition to paying off the mortgage, if the home has enough equity, you can use the proceeds to pay off marital debt (credit cards, car loans, etc.) and leave the marriage debt free. In some cases if the home has enough equity in it, you and your ex may be able to split whatever is left in order to start a new life and household with some funds.
Partition: The Process
If you and your spouse cannot agree on how to handle the home, or if only one spouse wants to sell the property, the property can be sold through a legal process called partition. Partition is a legal process used to divide and distribute property co-owned by multiple individuals, often when those individuals can’t agree on how to use or manage the property jointly. Florida Statutes Chapter 64 deals with partition actions in the state of Florida. Here are the basic steps of a partition case:
- Filing a Partition Lawsuit: Any co-owner, joint tenants, tenants in common, or coparceners, against their cotenants, or coparceners of a property can file a partition lawsuit in the circuit court of the county where the property is located. The lawsuit will ask for a court order for the property’s partition. The lawsuit must specifically state the description of the property.
- Types of Partition: There are two main types of partition: partition in kind and partition by sale.
- Partition in Kind: This involves physically dividing the property into separate portions, with each co-owner receiving ownership of their respective portion. Partition in kind is more common for properties that can be practically divided, such as large plots of land.
- Partition by Sale: If the property can’t be easily divided, or if it’s not practical to do so, the court may order the property to be sold, and the proceeds are then divided among the co-owners based on their ownership interests.
- Determining Ownership Interests: The court will determine the ownership interests of each co-owner. This can be based on factors such as the co-owners’ financial contributions to the property’s purchase, maintenance, and other relevant considerations.
- Sale Process: If the court orders a partition by sale, the property will be sold through a judicial sale supervised by the court. The proceeds will be used to pay the mortgage and then distributed among the co-owners according to their ownership interests.
Partition: During Divorce
Partition often comes up during divorce proceedings in Florida, particularly when couples co-own property, are seeking to divide their assets, but cannot agree on how to divide jointly owned property. In that scenario, one or both spouses may file for a partition action as part of the divorce process.
The partition case may run into obstacles if the property is not jointly owned or is non-marital. The largest problem in the divorce case is that a partition cannot be completed until such time as the Final Judgment is entered by the divorce case. Depending on how long a final judgment could take in a divorce case, due to the other issues between the spouses, the court will need to take into consideration as to who paid the mortgage, if there are any credits owed between the spouses, and what improvements have been made on the home during the pending divorce case. To learn more about the legal specifics of the calculations of a partition, review Harry Hipler’s article for The Florida Bar here.
If you are considering divorce and want to explore your options, please contact us to schedule a consultation at 727-359-0367 or at www.feherlaw.com.