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How does co-owning a house (and mortgage) work post-divorce?

Kennett Square, PA |

My wife and I are in the process of a mutual no-contest divorce. She moved out in October and stopped contributing to the mortgage. Our divorce proceedings through LegalZoom indicate that I will retain the house and be responsible for the mortgage payment and associated debt. However, as far as Bank of America is concerned, her name is still on the mortgage (30 year, 5% fixed, FHA) and, I assume, is still financially liable in the end.

1) Assuming a 3rd party would eventually buy her share out, how does one calculate the equity she earned while living in the house from Nov 2009 to Oct 2011?

2) Until that happens, I assume it is still a good idea to hold life insurance policies in each other's names as co-owners of the house - correct? We currently hold 100k spousal policies through work.

Because it was purchased so recently (and luckily, post real estate bubble), the house is underwater at the moment, so selling is not an option for either of us. Additionally, I have been informed that she would likely need to file a "quit claim" deed forgoing her legal rights to the house in order to avoid repaying the IRS her share ($4k) of the $8k first-time home-buyer's credit we received in tax year 2009. Taking the original info above into account, from my research, this essentially relieves her of her rights to be on the property but does not excuse her from the financial obligation through the bank. Is this correct?

Attorney Answers 2


You should contact a local attorney to review the documents you prepared on legal zoom. If you wrote a property settlement agreement, it should be reviewed before you sign it. There are certain components of a property settlement agreement that must be included in order for it to be effective. They concern your rights and responsibilities for past debts and future debts, and your interests in each other's property.

I cannot comment on the house, without seeing the specific terms of your agreement. However, I do not believe your mortgage company would allow for a quit claim deed. From my experience, most mortgages require satisfaction of debt, before you or she can transfer your interest. It may be willing to release her from her obligation on the mortgage, but I have never seen that happen.

The content of this answer does not constitute legal advice to the original poster or any other person who may read it. Further, this answer does not create an attorney-client relationship between the attorney posting this answer and the original poster, or any other person who may read the answer. If you are in need of legal advice, you should contact an attorney in your area or a legal referral service.

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Thank you for your response Donald. I was informed, and confirmed with a little research, that a quit claim deed does not involve the mortgage company -- it simply removes her name from the title, without removing her name from the mortgage as mortgage companies are not bound by quit claim deeds. Quit claims simply remove the legal rights of ownership to the house, but do not forgive any financial contracts the grantor may have signed. As far as the property settlement, we had little to nothing to divide besides furniture and credit-card debt, which we worked out between us. Because she moved out first, we agreed that I would retain the the house and the associated mortgage.


Co-owning a home post-divorce usually does not end well. Because you are not refinancing the mortgage, your Wife will probably be unable to purchase a home on her own because this mortgage remains on her credit. Most lawyers will not recommend such a resolution. As for her share, more facts are required. Has the value increased or decreased? Did she contribute to the purchase price. How long was the marriage? You really should consult local counsel.

Legal disclaimer: In accordance with the Avvo community guidelines, this communication does not constitute "legal advice", nor does it form an attorney-client relationship.

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Robert, thank you for your response. I would agree that most lawyers would not recommend such a resolution, but in her interest of moving out and leaving the marriage and not selling the house at a loss and going into debt with BoA, she/we have little other choice as the current market conditions make a net-neutral sale virtually impossible. We were married for 6 years, but only purchased the house in November 2009. It has lost value since then (about 9-10%), and the $ for the down payment and closing came from my 401k loan which has since been repaid. She is not interested in buying another home anytime soon, per her words. Our plan is for this to only be a temporary situation, as a 3rd party will likely buy out her equity and refinance the house in our names within a year or two anyway.

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