For many couples going through a divorce, the marital home is their most valuable asset. It may also be one of the most emotionally difficult issues to resolve. Questions frequently arise about who gets to remain in the home, whether it must be sold, how equity is divided, and what happens when one spouse wants to refinance and buy out the other.
In Maryland, the outcome depends on several factors, including how the home is titled, when it was purchased, how it was financed, and the financial circumstances of both spouses.
Understanding these issues before negotiating a divorce settlement can help protect your financial interests and avoid costly disputes.
Is the Marital Home Always Divided Equally in Maryland?
Not necessarily.
Maryland is an equitable distribution state, meaning that marital property is divided according to principles of fairness rather than an automatic 50/50 division.
Generally, property acquired during the marriage is considered marital property, regardless of whose name appears on the title. However, certain exceptions may apply, including property acquired before marriage, inheritances, gifts from third parties, and property traceable to nonmarital sources.
When determining an appropriate monetary award or qualifying property transfer, Maryland courts consider several factors, including:
The length of the marriage.
Each spouse's financial and nonfinancial contributions to the family.
The economic circumstances of each spouse.
How and when the property was acquired.
The value of each spouse's property interests.
Other factors relevant to achieving an equitable outcome.
A home purchased during the marriage may therefore be subject to equitable distribution even if only one spouse made the mortgage payments.
Can One Spouse Keep the Marital Home?
Yes. In many Maryland divorces, one spouse wishes to remain in the home rather than sell it.
This may be particularly important when children are involved or when one spouse has a strong financial or emotional interest in retaining the property.
One possible resolution is a buyout, where one spouse retains ownership of the home and compensates the other spouse for the agreed value of that spouse's interest.
For example, if a home is worth $650,000 and the outstanding mortgage is $450,000, the property has approximately $200,000 in equity before accounting for any other liens, transaction costs, or adjustments.
If the parties agree to divide that equity equally, one spouse's starting share would be $100,000.
However, the actual buyout amount may differ depending on the terms of the agreement, the classification of the property, any nonmarital contributions, and other financial considerations.
What Happens When One Spouse Refinances the Mortgage?
Refinancing is often necessary when one spouse intends to retain the marital home and both spouses are obligated on the existing mortgage.
A refinance may allow the spouse keeping the property to obtain a new loan in that spouse's name and use available equity or other funds to pay the agreed buyout.
However, refinancing can create additional issues, including:
Whether the spouse retaining the home qualifies for financing.
How the property will be valued.
Whether refinancing costs will be shared.
When the departing spouse will receive the buyout payment.
When the departing spouse's name will be removed from the deed and mortgage.
What happens if refinancing cannot be completed by the agreed deadline.
These details should be addressed clearly in a marital settlement agreement or other enforceable court order.
Importantly, removing a spouse's name from the deed does not automatically remove that spouse from the mortgage. A lender generally must release the borrower from the loan obligation, or the mortgage must otherwise be satisfied or appropriately refinanced.
Failing to address this distinction can leave a former spouse financially responsible for a property that he or she no longer owns.
Who Pays the Mortgage While the Divorce Is Pending?
This is another common source of disagreement.
In some cases, one spouse moves out while the other remains in the marital home. The spouse who leaves may continue contributing toward the mortgage, taxes, insurance, or other household expenses.
Whether those payments should be considered when dividing property depends on the circumstances, the parties' agreements, and any applicable court orders.
Spouses should maintain accurate records of mortgage payments, home equity loan payments, property taxes, insurance premiums, and significant property-related expenses.
Documentation may become important when determining the parties' respective financial contributions and negotiating a final settlement.
Can a Maryland Court Order the Marital Home Sold?
Yes. Under appropriate circumstances, a Maryland court may order the sale of jointly owned real property and division of the proceeds.
Maryland law also permits certain transfers of interests in a jointly owned principal residence, subject to statutory requirements, including protections relating to existing liens.
If the spouses cannot agree on whether to sell or retain the property, the court may need to resolve the dispute.
Because the court's authority depends in part on how the property is titled, it is important to determine the ownership structure before deciding what relief to request.
What If There Are Minor Children Living in the Home?
Maryland law recognizes that maintaining stability for children can be important during and after a divorce.
In qualifying cases, a court may award one spouse exclusive use and possession of the family home for a limited period, potentially up to three years after the divorce.
This does not necessarily mean that the spouse receiving use and possession becomes the sole owner.
The court considers applicable statutory factors, including the children's interests and the parties' financial circumstances.
Use and possession arrangements should be distinguished from the ultimate division of ownership and equity.
Why the Details of a Divorce Settlement Matter
Disputes involving the marital home do not always end when the parties agree on a dollar amount.
Problems can arise months later when a refinance is delayed, closing costs are disputed, or one spouse fails to complete the required transfer of ownership.
A carefully drafted settlement agreement should address the amount and timing of any buyout, refinancing obligations, allocation of expenses, and consequences if a party cannot comply.
The more specific the agreement, the less room there may be for future disagreements.
Speak With a Maryland Divorce Attorney About Your Marital Home
The marital home is often a family's largest financial investment. Decisions regarding its sale, refinancing, or transfer can have significant consequences long after a divorce is finalized.
Before agreeing to a buyout or signing documents transferring ownership, it is important to understand your rights, obligations, and the financial implications of the proposed arrangement.
The Law Office of Neveen Kurtom, LLC represents clients in Maryland divorce, marital property division, settlement negotiations, and related family law matters.
Whether you are considering divorce, negotiating a property settlement, or facing a disagreement involving your marital home, experienced legal guidance can help you make informed decisions.
Law Office of Neveen Kurtom, LLC
1 Research Court, Suite 450
Rockville, Maryland 20850
Phone: (301) 356-4423
Website: www.mymarylandattorney.com
Experienced Guidance. Strategic Advocacy. Compassionate Representation.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Every case is different. Reading this article or contacting the firm does not create an attorney-client relationship.