The House

New York City Mediation Law Attorney Alla Roytberg of continues her series on real estate issues during divorce, this time taking on the house.When people own a house, their proof of ownership is a deed, and very often in a marriage, the deed states that the house is owned by both husband and the wife together. In New York State, this ownership is called “tenants by the entirety” and it means that if something happens to one of the spouses the house ownership automatically passes to the surviving spouse.

Sometimes, if parties divorce and still want to retain the house jointly in the future, they would switch their ownership from being “tenants by the entirety” to becoming “tenants in common.” A tenancy in common is a basic type of ownership by partners, where if one of the partners passes away, his or her interest gets transferred to his/her individual heirs rather than to the remaining owner. If owners are not married to each other but want the ownership of the house to pass to surviving owners, they would ordinarily state on the deed that their ownership is as “joint tenants with right of survivorship.”

In a separation or divorce, spouses have to explore various options. One of them may have moved out of the home while the other is still occupying it:

  • Who pays expenses, while they are trying to address and resolve what to do with the house – the mortgage, real estate taxes, homeowner’s insurance, utilities and repair costs?

  • Do they intend to continue their joint ownership for a number of years?

  • Does the spouse who occupies the house have the resources to buy out the other’s interest or is there a way to trade it against other marital assets?

  • Does the house need to be sold? If so, how quickly?

Let’s say the wife is staying in the house with the children and the husband has moved out. If the husband is making child support payments and the wife is carrying the costs of the house, his main interest going forward is getting 50% of the equity out of house, either through its sale, or via a buyout of his interest by the wife. The wife who lives in the home may want to delay this process, and that can cause a lot of problems.

If the husband and wife decide to sell, they have to agree on the price, a broker and often a real estate lawyer to use in the transaction. Once the offer is accepted, there may be a difficulty in signing a contract, especially if there is a dispute as to who is responsible for payment of certain fees on the house after one of the parties has moved out. Maybe there are mortgage arrears, or there were repairs that were made and were paid for by only one of the parties. The feud can cause a delay, which means that they could lose the buyer and end up in a litigation over the real estate.

There are ways to address all of these issues but both the parties and the lawyers have to be very creative in doing so. For example, the parties may agree that one of them will advance the money towards repairs or legalization of improvements and be reimbursed from net proceeds. Or, at the very least, they can agree that disputed money will be held in their real estate lawyer’s escrow account after closing. This way, the sale will proceed.

If parties and their attorneys are open enough to explore options, they can always find one that will work and result in a viable outcome for both sides.

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