With the exception of child custody issues, few decisions a court makes are as weighty as those regarding the marital home.
In the blink of an eye, judgments can be rendered that will affect the rest of your life, and those of your children. But while the case is still in process, you have a chance to shape the outcome by mutual agreement. For example, you can agree that the home will be sold, and the court will generally go along with that. If one party violates that stipulation, the court may step in and order the agreement to be carried out. But as attorney Pamela Edwards-Swift observes, “Absent a stipulation, the court, as a general rule will not order a home to be sold unless there is a compelling reason to do so—such as an imminent foreclosure.”
That gives great power to the divorcing parties during the initial phases—so long as they can cooperate with each other. This is a good time to heed the biblical admonition to “agree with your adversary quickly”—just not too quickly, or before seeking expert advice. The window for reaching a consensual arrangement will eventually close.
Edwards-Swift describes the process: You file a petition for dissolution, and then the case goes along and eventually if you don’t settle the case, you have a trial date. Now, at the time of trial they will order it sold. But they’re not going to order it sold anytime between point A and point Z, unless there’s a really good reason to do so.
Once that moment of judgment comes, it can be swift and unsparing. As Vogl says, “ The duty of the court is to divide the community property. If the house is community property, the duty of the court is to divide it. The court has the power to allow one party to remain in it and order equivalent payment of the equity on a date certain.” ( this applies in California, which is a community property state; procedures in other states may vary, but the need to reach a judgment does not.) What happens if one party doesn’t comply? “I see orders where the court says, ‘Sir, you have ninety days to buy her out,’” Vogl says. “And then he gets the loan on the ninety-first day—now, what do we do?” Obviously, the resolution is delayed. “But if it’s delayed,” Vogl says, “there’s going to be interest.” The unpaid balance begins accruing interest charges from the first day of noncompliance.
And as Vogl notes, “ The court can’t waive the interest—it’s by law. Sometimes courts issue rulings that are simply unworkable. A judge may agree with the divorcing spouses that the marital home should be sold and the proceeds divided. Financial arrangements may be based on a presumption that the home will fetch a certain price. But what if it doesn’t receive any offers and has to be marked down?
In another scenario, the parties may agree that one spouse will re nance the home and buy out the other party. But what if that person can’t qualify for a loan? Courts often make misguided rulings in cases like this, because they aren’t familiar with the realities of the market. And the attorneys may agree for the same reason. Such complications can throw the entire process into chaos, costing you time, money, and grief.
It’s your future that is on the line. Be proactive and protect yourself: get a realistic property valuation beforehand and obtain that loan pre-approval, all early on.