Article: Home Division Checklist for Attorneys
For family law attorneys and divorce mediators, the division of marital property—particularly the family home—is a critical and often complex component of a divorce settlement. Using a comprehensive checklist can ensure all essential details are covered, protecting your client’s interests and facilitating a smoother resolution.
Initial Assessment & Documentation
- Title & Deed Review: Confirm whose name(s) are on the property deed and the original purchase date.
- Mortgage & Loan Documents: Gather all mortgage statements, home equity lines of credit (HELOCs), and other loan documents to determine the outstanding debt and monthly payments.
- Valuation: Order a professional appraisal of the property from a neutral, certified appraiser. Ensure both parties agree on the appraiser’s selection.
- Financial Disclosures: Obtain full financial disclosures from both spouses, including income statements, tax returns, and asset inventories. This is crucial for determining affordability and potential for buyout.
Analyzing Client’s Objectives
Client’s Desire to Keep the Home: Discuss the client’s emotional and practical reasons for wanting to keep the home.
Affordability Analysis: Conduct a thorough review of the client’s post-divorce income and expenses. A mortgage professional can provide a “Divorce Mortgage Assessment” to determine if the client can qualify for a new loan.
- Buyout Strategy: If a buyout is a viable option, outline the source of funds. Will it come from a cash-out refinance, a lump sum of alimony, or the liquidation of other assets like a 401(k)?
- Relocation Plan: If the client decides to sell, discuss their plans for finding a new, affordable home.
The Settlement & Agreement
- Quitclaim Deed: Ensure the non-retaining spouse signs a quitclaim deed to transfer their ownership interest to the other.
- Mortgage Liability: The final settlement agreement must explicitly address the mortgage. It should state that the spouse retaining the home will be solely responsible for the payments and must refinance to remove the other spouse’s name from the loan within a specific timeframe.
- QDRO for Retirement Assets: If retirement funds are being used to offset the home’s value, ensure a Qualified Domestic Relations Order (QDRO) is drafted and signed to allow for a tax-free transfer.
- Division of Proceeds: If the home is to be sold, clearly define how the net proceeds will be divided after all closing costs, taxes, and fees are paid.
Common Issues to Anticipate
Non-Compliance: What happens if the spouse keeping the house fails to refinance in the allotted time? The agreement should include a “trigger clause” that mandates the sale of the home if the refinance is not completed.
- Market Fluctuations: Consider how a change in the real estate market could affect the property’s value before the sale or refinance is finalized.
- Hidden Costs: Don’t forget to include provisions for future costs such as property taxes, home repairs, and potential capital gains taxes.
By utilizing a detailed checklist and collaborating with a Certified Divorce Lending Professional (CDLP®), family law attorneys can provide their clients with a robust and well-defined plan for the division of their most valuable asset, ensuring a more stable financial future.