When spouses get divorced, often one of the largest issues, if not the largest, is what happens to the marital home that is jointly titled in both spouses’ names. While there is the option of keeping it in both names after the divorce, this is ill-advised and almost never happens in practice. Instead, the goal is to get the house into one spouse’s name, or if neither spouse wants it, to sell it.
If both spouses agree to transfer title to one spouse’s name, the spouse who will keep the house should attempt to refinance the mortgage into her name only. This relieves the other spouse of liability for the mortgage loan and also frees up money to pay the other spouse for his interest in the house. In property settlement agreements, there is usually a provision giving that spouse a set period of time, usually 30 to 90 days, to refinance the property, and mandating that if the refinance does not occur by the deadline, the house will be listed for sale.
It is possible for spouses to transfer title to one spouse only and keep both names on the mortgage, though this is not advisable for the spouse who is not keeping the house. Not only will he face liability if the mortgage is not paid, but being on the mortgage may also affect his ability to take out other loans.
However, some well-meaning spouses will agree to stay on the mortgage. In this case, the mortgage company cannot enforce your mortgage’s due-on-sale clause, which requires the entire mortgage to be paid if an ownership interest in the property is transferred. This is because federal law prohibits the enforcement of due-on-sale clauses upon transfers between divorcing spouses.
Finally, if neither spouse wants to or can afford to keep the house, it can be sold. This is usually straightforward, however issues can arise if the house is underwater or if there are outstanding liens that complicate the sale. If you are facing divorce, it is best to work with a Pennsylvania divorce attorney who can help you determine your best course of action.