Minnesota Divorces and What To Do With the House?

Home with ChimmeyMinnesota divorcing parties often own a home that carries a mortgage and maybe a second mortgage or equity line of credit. Since 2008, the equity in homes has deceased.  Some homes are upside down; that is, parties owe the bank more than the house is worth.  Some homes have recovered equity, but nowhere near the equity of pre-2008 values.

Minnesota divorcing parties have a few options in determining what to do with the family homestead.

1. The home may be sold.  If so, it may not be necessary to get an appraisal if both parties agree to sell. The parties need to decide who will live in the home during the listing; who will make the house payments and related costs like insurance, repairs, maintenance, and taxes; and, how  any net proceeds from the sale will be divided.

2. If one party wants to keep the homestead, then that party usually will have to take over the mortgage and any additional mortgages or equity lines of credit; the party keeping the homestead will have to pay out the other party his/her share of any equity; the party keeping the homestead will usually have to refinance and remove the other party’s name from the mortgages. No Minnesota Statute requires that the home is refinanced, but the party moving out needs to protect his/her credit and ability to buy another residence.   Changing title to real property does not remove a party from the obligations of the mortgages.  Parties can negotiate timelines for the foregoing refinancing and pay-outs.

3. The parties may decide to keep the homestead jointly and just change title to tenants in common. Often parties who have minor children may want to keep the homestead until the youngest child graduates from high school.  Parties may, once again, negotiate and agree to sell the homestead at a later date when the children turn 18.  Parties need to decide responsibility for the homestead mortgage and other expenses.

4. Parties can certainly decide to continue to live together pending a sale or pending an increase in equity.  Living together may work if parties are cooperative and create an agreement that addresses concerns and issues in continuing to live together; such as, neither party will bring another significant other into the home.

Minnesota divorcing couples can agree on any creative solution that is reasonable and fair to both parties and set out their agreement for the family Court.  Complex arrangements for the disposition of the homestead in a Minnesota divorce should be reviewed by an attorney. There are title considerations as well as equity pay-outs, statutory interest, martial liens on a homestead to protect the moving party, as well as other legal and practical matters at issue in Minnesota divorces when parties own a homestead or other real property.

A word of caution for pro se litigants using the generic court forms:   Just assigning the homestead to one party is an insufficient determination of all the issues involved in the award of the homestead in a Minnesota divorce proceeding.   Use this post as a checklist or consult a Minnesota divorce lawyer for help in drafting this part of the divorce agreement.   Many Minnesota divorce lawyers offer a limited service and will help a party in drafting or review a document and offer legal advice.   Note that an attorney may only represent or help one party in a divorce and not both parties.  Helping both parties is a conflict of interest for attorneys in a Minnesota divorce.

Kate Willmore

Saint Cloud, Minnesota, Divorce, Family Lawyer, Father’s Rights, Family Court Lawyer and Mediator

(320) 217-6030

Copyright 2014

 

About Kate Willmore, Esq.

Kate Willmore, Saint Cloud, Minnesota, divorce, custody and family attorney brings over 25 years experience to every client's legal matter. *** Licensed in Minnesota and in California

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