During a divorce proceeding, marital assets are divided between the two parties. New Jersey law states that all property acquired during a marriage is marital property regardless of how it is titled. The courts also follow a policy of equitable distribution of those assets. This does not necessarily mean equal distribution. Rather, it is distribution in a manner that the court deems fair to both parties based on their situation.
One of the major assets of a marriage is the marital home. There are several options for the disposition of the home. One spouse can purchase the other spouse’s share of the real estate, the real estate can be sold and proceeds divided, or the property can remain co-owned and/or shared by the parties. The first two options are fairly straightforward and self-explanatory. However, the third requires a bit of explanation and careful consideration. Before agreeing to co-owning property with an ex-spouse, the pros and cons should be carefully considered and discussed with experienced divorce lawyers in New Jersey.
Co-ownership might be a good idea if the custodial parent is unable to purchase the real estate but the parties’ desire for the minor children to remain in the home. The divorce agreement lists who is responsible for which expenses associated with the home, at what point the home should be sold, and how the proceeds should be divided. Sale of the property might be upon the graduation from highschool of the youngest child or at another mutually agreed on date.
In a weak real estate market, it might be in both parties’ best interest to remain as co-owners of their marital real estate in order to obtain a higher sale price. As stated above, payment of expenses should be listed in the divorce agreement. Should the parties decide to reside together and share the home, each person’s rights and responsibilities should be stated in the agreement as clearly and specifically as possible.
When considering the option of co-ownership, the risks should be carefully weighed. Although the divorce agreement will list the obligations of each party, there must be a trust that the ex-spouse will pay his or her share in a timely fashion. If not, the credit of both parties can be damaged. It may also be more difficult to obtain more credit if needed due to a large mortgage balance. The death of the other party is also a risk to consider that is important to plan for. Both parties should know who the beneficiary of each other’s share of the home is. Bankruptcy of a party could also be of concern. Depending on the situation, the home could be ordered to be sold to pay off debt.
Co-ownership of property after divorce may or may not be right for you. Every situation is unique. Contact our office to speak with one of our family law attorneys to discuss all of your options.