What should we do with our home?
When a spouse files for a ‘dissolution of marriage’, the parting couple is left with a dilemma. The marital home is one of the biggest investments in a married couples’ life and couples are often in disagreement over what should happen to their home after divorce. Where one spouse may want to sell the property, the other would like to keep living there.
Washington divorces require the division of property to be ‘fair and equitable’. This does not necessarily mean a fifty-fifty division of assets between the two divorcing parties. However, the court overlooks a number of factors before making the division of the assets (house).
When deciding on who gets the house, the court looks at the financial factors of both spouses, if they can actually afford to pay mortgage and taxes on the house. If the court feels that either party may be under the threat of foreclosure (seizure of the house by the lender), it may order the sale of the house to protect both parties from financial burden (bankruptcy).
Valuation of the home
During the divorce process it is best for both spouses to keep their options open especially if the house is jointly owned. One of the most common suggestions courts advise divorcing couples with (in regards to the marital home) is selling the home and splitting the profits between each other. If the divorcing parties plan a civil, clean and quick divorce, then they may be in agreement over the sale of the house. Hence, a complete valuation of the house should be conducted.
In Washington, state law requires that county assessors appraise all property at its full and fair market value. All Washington counties revalue their properties each year and physical inspections are observed once every six years. If the appraised value of your property has deviated, a value change notice will be issued to you with the old and new value of the house and improvements around the land. By comparing the old and new values, spouses can then choose whether to sell or keep the house. However, the assessed value of the house could be less than the appraised value subject to property tax exemption or reduction.
If you are not in agreement over the assessed value of your property, you are entitled to contact your local county assessor’s office. You may find yourself in disagreement with the county assessor, in which case you may file an appeal with the County Board of Equalization (BOE) where your property (house) is located.
For your appeal to be considered successful, evidence of assessor’s incorrect valuation should be presented. This could include values of the properties around your house, showing different numbers as compared to your property’s valuation, or even documentations about conditions around the area (of your house) that the assessor may have missed out on.
Refinancing the house
When one of the divorcees is not in favor the sale and would rather keep the house than sell, it could turn out to be a very complicated issue. If the other party is willing enough to walk away from the ownership, the spouse has an option to buy out the parting spouse’s share in the property. This also requires the departing spouse to not be associated with the any of the obligations that may still entail such as mortgages.
To relieve the parting spouse of all the obligations would require the other party to refinance the house. The process of getting rid of the old mortgage with a new one is called refinancing. For example, if a husband with mortgage in his name acts as the parting spouse, the wife may have to refinance the house to avoid any irregularities with the lending authorities as the lenders can still go to the husband for the repayment of the mortgage unless proper arrangements have been made.
To apply, a spouse must apply for a loan to refinance the mortgage in (just) their own name. Keep in mind, the refinancing will only be accepted if the spouse provides significant proof that they’ll be able to pay the mortgage on their own in due time. If the lender feels that the spouse’s financial situation is not strong enough and they will run into trouble in the future, the application to refinance the house can be rejected.
However once the application has been accepted, the spouse can take their ex-spouse’s name off the deed of the property, as well as the mortgage. This can be done once the ex-spouse signs a ‘quitclaim deed’, which is a legal document which used to transfer interest in real property from one party to another.
The ex-spouse may be required to be physically be present in front of the lender (handler of the refinance) and their former partner to sign the quitclaim deed document. After the endorsement from the lender, the refinancing of the mortgage has been completed and the ex-spouse officially has no financial obligation towards the house.