When two spouses get a divorce in New York, they must address multiple complicated issues, including the equitable distribution of marital property. This often includes the marital home. A divorce agreement, or a court order granting a divorce, usually includes provisions for the disposition of the marital home. The sale of a home might not be practical or even possible at the time of the divorce for a variety of reasons. What happens when a home is to be sold after a divorce? Should the person paying the mortgage get credit for the full amount of the payments or some other amount? As for the person waiting to receive their share of the sales proceeds, should they receive interest in some form? These questions have no easy answers, but they are worth exploring.
Section 236(B)(5)(a) of the New York Domestic Relations Law requires a court to resolve all issues of marital property distribution in, or prior to, a final judgment of divorce, except for issues regarding which the parties have entered into an agreement. Postponing the sale of a marital residence requires careful planning in the hopes of avoiding a return to court. A court is unlikely to approve the future sale of the home without both parties’ agreement, along with a plan for either selling it or otherwise disposing of one spouse’s marital property interest.
Divorcing spouses have several options when postponing the sale. One spouse may buy out the other spouse’s share of the marital interest, either in cash or with a promissory note. This arrangement, along with most other postponements, creates potential problems with a mortgage lender. Any postponed sale means that one spouse must continue making mortgage payments, while the other spouse remains liable for missed payments.