What Happens to the House in a Divorce or Separation?

CAROLE ALBRIGHT | Attorney & Managing Partner, Certified Family Law Specialist, Law Firm Carolinas, PA

BY CAROLE ALBRIGHT Attorney & Managing Partner, Certified Family Law Specialist, Law Firm Carolinas, PA

In many marriages, the largest asset is the marital home. Not only does it have significant financial value, it usually has great sentimental value for the owners. If a couple is separating and looking towards divorce, one of the first decisions separating spouses will have to make is who is moving out of the home. In North Carolina, neither party can “kick out” or “lock out” the other party absent a court order or agreement so sometimes the hardest part of separating is actually getting separated. Before or after separation, however, the parties can settle some or all of their marital issues, including whether to sell the Residence, in a contract typically called a Separation and Property Settlement Agreement.

If the parties decide to sell the home, the Separation Agreement can spell out the steps the parties will take to sell the residence, including the listing agent, listing price, terms for reducing the price over time, repairs needed and how the sales proceeds will be divided. It is important to address who will live in the residence and who will be responsible for paying the mortgage and other expenses related to the residence until it sells.

Alternatively, the Agreement could provide that one party will retain possession and ownership of the house. A deed transferring title to the party retaining the residence will need to be executed but first, the party retaining the home should take steps to refinance or assume any mortgage, equity line or other loan on the home thus releasing the party moving from the residence from liability on the debt. At the time the moving party is released from the debt, that party should execute the deed transferring their interest to the other party. The deed should include language acknowledging that the conveyance is made pursuant to the terms of a separation or incident to divorce and vests fee simple title in the grantee as his or her sole and separate property.

If the party retaining the home is the only party to the deed, the moving party could execute a free trader agreement waiving the requirement that a new deed be executed, but the best practice is to execute a new deed including the conveyance language stated above.

If after the Separation Agreement is signed, a party refuses to comply with the listing terms such as failing to put a for sale sign in the yard, failing to sign the deed to the party retaining the residence, etc., the other party can seek a court order requiring the party to comply with the terms of the separation agreement. The court can also execute a Commissioner’s Deed substituting the judge’s signature for the party refusing to sign. Once the party retaining the residence records the deed, he or she is the lawful owner.

If your client needs assistance with regard to his or her rights in divorce, recommend that they seek advice from a local family law attorney who can help them make decisions regarding their home as well as child custody, financial support, and alimony. A family law attorney can also prepare or review separation agreements, free trader agreements and deeds so if your client has questions about these documents or the divorce process, refer them to an attorney.

Carole Albright is the managing partner at Law Firm Carolinas. She is a North Carolina certified family law specialist and has practiced family law in the state for over 25 years. Additionally, Carole is a registered Parliamentarian and has worked with NC REALTORS® and local REALTOR® boards at Ethics Hearings and NC REALTORS® meetings.