The Deed to Our Home Is in My Spouse’s Name, but I Am on the Mortgage – Am I Responsible to Pay the Mortgage After the Divorce?
We often hear this question during divorce proceedings, particularly when minor children are involved. There are two primary things to consider:
- How is the property titled, that is, are both parties names on the deed or is only one party’s name on the deed;
- Who signed the mortgage?
Many times, due to credit scores of one spouse or other financial issues, the loan used to acquire the marital home is based solely on one spouse’s credit strength. In this situation, the spouse with the stronger credit will be the only party signing the Note, but both spouses are required to sign the Mortgage. This is because the Note is the instrument of credit and state the terms of the loan (interest rate, monthly payment amounts, payment dates, and the maturity date of the Note) and the Mortgage is the instrument that secures the Lender’s (Mortgagee’s) interest in the Property by creating a lien against the title to the Property.
The reason that Lender’s require both spouses to sign the Mortgage is to make both parties’ interest in the Property subject to the Mortgage. Consider the following scenario: the borrowing spouse dies while the Mortgage was still in effect and the parties were still married at the time of that spouse’s death; further, the surviving spouse did not sign the Mortgage. In this scenario, the Lender cannot foreclose the Mortgage because the surviving spouse did not make his or her interest subject to the Mortgage because they did sign the Mortgage. The surviving spouse in this situation, may be able to live in the Property without making any further mortgage payments. The surviving spouse will, however, be required to pay in annual property taxes and to maintain appropriate insurance coverage on the Property. The Mortgage will continue to exist as a lien against the title to the Property and all monies owed to the Lender, including late fees, interest, etc., will have to be paid at the time that the property is sold.
Taking this scenario one step further and adding the fact that only one spouse’s name is on the Deed to the Property and that spouse dies during an intact marriage. Pursuant to the Constitution of the State of Florida, the spouse not in title to the Property enjoys a life estate interest in the Property for the duration of his or her life, as long as the Property remains the homestead property of the surviving spouse and continues to pay the attendant property taxes and insurance.
Now, let’s say that the judge has determined that your spouse is to be the primary custodial parent of your children and awards to that spouse the exclusive use and possession of the marital home. Typically, the spouse to whom the marital home is awarded is also required to pay the monthly mortgage payments, property taxes and insurance. However, depending on your annual income and that of your spouse, you may be required to provide those funds in either the form of child support or spousal support or the receiving spouse will, or should, pay the monthly mortgage payment from these funds.
In the event that your former spouse fails to pay the monthly mortgage payments consistently and in a timely manner that results in the Mortgage going into default, the Lender will be looking to you for payment as well and if a foreclosure proceeding is filed, you will be a named defendant and experience the same adverse effects to your credit as your former spouse.
This is true even when the Court orders you to quit-claim your interest in the marital homestead to your former spouse. The Court has no jurisdiction over the Lender and depending on the specific language in your mortgage relating to transfers of interests in the property, the Court’s order alone could create an event of default and the Lender accelerate the Mortgage and institute an action to foreclose the Mortgage.
Even though the Court’s orders requiring one party to convey their interest in the marital homestead and that the receiving spouse indemnify the other spouse in the event of foreclosure, said indemnification is usually a very thin shield. The only way that your former spouse can successfully indemnify you in such a situation is if he or she has the financial ability to either pay off the existing Mortgage or to refinance the Mortgage and remove you from both the Note and Mortgage.
It is also important for you to understand that should you and your spouse have acquired investment properties during your marriage, these properties’ ownership will be determined in a manner similar to the marital homestead, without the constitutional protections afforded to the homestead Property.
At Daniel M. Copeland, Attorney at Law, P.A., we are not only skilled and experienced in assisting clients in the dissolution of their marriage, child custody, child and spousal support, because of our vast experience in litigation involving real property, we are able to help structure any real property distributions or settlements that best protect your interests. For a more detailed discussion of the services that we offer, read our page dedicated to Dividing Marital Property.
Call us immediately – We are ready to help protect your interests in your marital properties.