“What Happens In A Divorce When One Party Is Awarded The House But Doesn’t Pay The Mortgage?”

There can be a lot of reasons why a community property house may not be sold as a part of a divorce, including:

1. One party wishes to keep the house, and the other party agrees.
2. The minor children live in the house.
3. The house does not have enough value to be worth a sale.
4. The parties may not have appropriate credit to sell the house and purchase separate houses.

The division is fairly simple if the party keeping the house can refinance the property immediately as part of the divorce settlement. But what if they do not qualify for a loan at that time?

There are a few options. First, you can set a time frame for a refinance to remove the other party’s name. This can be as short as a few months, or as long as a few years. It does need to be clearly spelled out, however, what happens if the other party can’t get financing. Will the house be sold? Will the other party be awarded possession?

In addition, what if the party who has the house stops making the payment? This will affect the credit of both parties.
A further consideration is whether or not the party who is giving up the house anticipates buying another residence—-if so, then they may have trouble doing so because the loan on the previous house is still in their name and on their credit as a debt. Timing needs to be discussed in those cases.

The possibilities need to be clearly discussed and then outlined in any agreement or settlement. Otherwise, you may find yourself without a clear remedy. By making the terms clear, you allow yourself the option of filing a motion with the court to make the other party follow the terms of the settlement, either by giving up possession and title to the house or by selling.

You should be aware that any of these remedies requires time, and often judges will allow the other party a short period of time to obtain financing. You may need to return to court several times to determine if the judge is going to allow a refinance of the property or order a sale of the residence.

DISCLAIMER: All legal principles quoted are valid as of the date of writing in the State of California. However, you should NEVER base your actions on a legal article, blog, or internet story, as facts in real life are complicated. You should have your case evaluated by an attorney experienced in the area of law needed for your case. In addition, there are often exceptions and potential changes to results that occur due to facts that you may think are trivial or unimportant. This article should not be taken in any way as legal advice on your specific legal matter.