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When Neither Spouse Wants The Home After Divorce: Managing Property Division in Maryland and DC

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Divorce is a complex process that often involves difficult decisions about asset division, particularly when it comes to the marital home. While it’s common for one or both spouses to want to keep the family residence, situations where neither party desires to retain the property are increasingly frequent. This article explores the legal options and considerations for couples in Maryland and Washington, DC, who find themselves with an unwanted marital home during divorce proceedings.

Understanding Marital Property in Maryland and DC

Before delving into specific options, it’s crucial to understand how Maryland and DC laws treat marital property. Both jurisdictions follow the principle of equitable distribution, which means that marital assets are divided fairly, but not necessarily equally, between spouses during divorce.

In Maryland, marital property generally includes all assets acquired during the marriage, regardless of whose name is on the title. The state’s Family Law Article §8-201 defines marital property and outlines the factors courts consider when determining equitable distribution.

Similarly, DC Code §16-910 governs the distribution of property in divorce cases within the District of Columbia. The law requires courts to consider various factors, including the duration of the marriage, each party’s economic circumstances, and contributions to the acquisition of marital property.

Scenarios Where Neither Spouse Wants the Home

Several scenarios can lead to both parties wanting to relinquish the marital home:

  1. Financial Constraints: Post-divorce, maintaining the home might be financially unfeasible for either spouse individually.
  2. Emotional Reasons: The home may hold painful memories, prompting both parties to seek a fresh start elsewhere.
  3. Relocation Plans: If one or both spouses plan to move out of the area, keeping the local property may not make sense.
  4. Underwater Mortgage: When the home’s value is less than the outstanding mortgage, neither spouse may want to assume the financial burden.
  5. High Maintenance Costs: An older home or one requiring significant upkeep might be unattractive to both parties.

Options for Handling an Unwanted Marital Home

When neither spouse wants to keep the marital home, several options are available under Maryland and DC law:

1. Selling the Home

Selling the property is often the cleanest solution when both parties agree to relinquish ownership. This option allows for a clear division of any equity and closure of joint financial obligations.

Legal Considerations:

  • In both Maryland and DC, if the home was purchased during the marriage, it’s typically considered marital property subject to equitable distribution.
  • Any profits from the sale would be divided according to the divorce agreement or court order.
  • If there’s negative equity, couples must negotiate how to handle the shortfall.

Example Scenario:

John and Sarah, a couple in Bethesda, decide to divorce after 15 years of marriage. Their home, purchased 10 years ago, has appreciated significantly. Neither wants to stay in the area post-divorce. They agree to sell the home and split the proceeds equally after paying off the mortgage and closing costs. This allows them to start fresh financially and emotionally.

2. Renting Out the Property

If market conditions aren’t favorable for selling, or if there’s potential for appreciation, couples might consider renting out the property.

Legal Considerations:

  • Both Maryland and DC require landlords to comply with specific regulations regarding property maintenance and tenant rights.
  • Couples must agree on how to manage the property, divide rental income, and handle expenses.
  • A written agreement should outline responsibilities and profit-sharing arrangements.

Example Scenario:

Michael and Dylan, residing in Washington, DC, are divorcing but can’t sell their condo due to a temporary market downturn. They agree to rent it out for two years, splitting the rental income and expenses equally. They hire a property management company to handle day-to-day operations, reducing potential conflicts.

3. Short Sale

In cases where the mortgage exceeds the home’s value, a short sale might be an option.

Legal Considerations:

  • Both Maryland and DC allow short sales, but they require lender approval.
  • Couples should be aware of potential tax implications and the impact on their credit scores.
  • Maryland’s Protection of Homeowners in Foreclosure Act (PHIFA) provides additional safeguards for homeowners considering short sales.

Example Scenario:

David and Rachel, living in Baltimore, find themselves with an underwater mortgage during their divorce. They negotiate with their lender to approve a short sale, allowing them to sell the home for less than the outstanding mortgage balance. While this impacts their credit scores, it enables them to avoid foreclosure and move on financially.

4. Deed in Lieu of Foreclosure

This option involves voluntarily transferring the property title to the lender to satisfy the mortgage debt.

Legal Considerations:

  • Both Maryland and DC allow deeds in lieu of foreclosure, but lender agreement is crucial.
  • Couples should understand the potential for deficiency judgments and tax consequences.
  • In DC, the Saving DC Homes from Foreclosure Amendment Act provides additional protections for homeowners facing foreclosure.

Example Scenario:

Charlotte and Emily, a couple in Silver Spring, are divorcing and struggling to keep up with mortgage payments on their underwater property. After consulting with their attorneys, they negotiate a deed in lieu of foreclosure with their lender, allowing them to walk away from the property without going through a lengthy foreclosure process.

5. Delayed Sale

In some cases, couples might agree to postpone the sale of the property while continuing to co-own it for a specified period.

Legal Considerations:

  • A detailed co-ownership agreement is essential, outlining responsibilities for mortgage payments, maintenance, and eventual sale proceeds division.
  • Both Maryland and DC courts can incorporate such agreements into divorce decrees.

Example Scenario:

Alex and Sophia, divorcing in Clarksville, have two children in high school. They agree to keep the family home for three more years until the youngest graduates, allowing the children to maintain stability. They create a comprehensive co-ownership agreement, detailing financial responsibilities and the process for selling the home in the future.

Key Factors to Consider

Regardless of the chosen option, divorcing couples in Maryland and DC should consider the following:

  1. Tax Implications: Consult a tax professional to understand the potential tax consequences of selling, renting, or transferring ownership of the marital home.
  2. Credit Impact: Be aware of how different options might affect individual credit scores, particularly in cases of short sales or deeds in lieu of foreclosure.
  3. Future Housing Needs: Consider how the decision will impact each spouse’s ability to secure future housing.
  4. Legal Documentation: Ensure all agreements regarding the marital home are properly documented and, when necessary, incorporated into the divorce decree.
  5. Professional Guidance: Consult with divorce attorneys, real estate professionals, and financial advisors to make informed decisions.

Conclusion

When neither spouse wants to keep the marital home after divorce in Maryland or Washington, DC, several options are available. The best choice depends on various factors, including the property’s equity position, market conditions, and the couple’s financial situation. By carefully considering these options and seeking professional advice from a family court lawyer, divorcing couples can navigate this challenging aspect of property division and move forward with their lives.

If you’re contemplating divorce or have questions about the process in Maryland or the District of Columbia, don’t hesitate to call the Law Offices of Thomas Stahl for legal advice. Schedule a consultation today or call us at (443) 331-2770

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Laws regarding property division in divorce can be complex and may change over time. Always consult with a qualified attorney licensed in your jurisdiction for personalized legal advice regarding your specific situation. The scenarios presented are hypothetical and for illustrative purposes only. Every divorce case is unique, and outcomes may vary depending on individual circumstances and judicial discretion.

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