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Sometimes, property division conflicts occur years after divorce

Once the bottom lines have all been signed and the dust has settled, most Maryland spouses believe that their divorce is over and they are free to move on with their lives. In reality, however, there are instances in which property division issues can continue to create problems, even years after the divorce has been made final. The following example is just one of many issues that can arise after both spouses have moved on and made headway in their individual lives.

Consider a scenario in which one spouse wants to remain living in the family home, while the other wants to move on to a new residence. This is a common occurrence, and is dealt with by documents stating that the remaining spouse is the sole party who is held responsible for making payments on the property, and is the sole party with any ownership interest in the home. Another common provision is that the spouse who stays in the home has a certain amount of time to refinance the property in his or her own name.

In reality, however, refinancing is not always possible, and the remaining spouse might encounter financial turmoil that would make it difficult to keep the home. Faced with foreclosure, he or she could negotiate a short sale with the lender. A common aspect of a short sale is an incentive payment made to the borrower, with the goal of encouraging the homeowners to leave the home in good condition. The other spouse, however, might feel entitled to a share of that payment, as he or she might view it as stemming from marital property.

If such a case went to court, the outcome would likely rely on the language used in the divorce agreement. If the remaining spouse was noted to be the sole owner of the home and solely responsible for all mortgage payments, then he or she may be allowed to keep any incentive payments offered by the lender. If the departing spouse retained an ownership interest in the home, however, then he or she might be entitled to a share of such payment. While this scenario will not affect many Maryland couples, it is an issue that illustrates the complexity of property division, and the importance of reaching a clearly outlined agreement.  

Source: The Washington Post, "Short sale of home owned by divorced couple creates legal complications", Ilyce Glink and Samuel J. Tamkin, May 15, 2017

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