What Happens to Mortgage Obligations After a Florida Divorce?

Divorce can be a difficult process, even when the spouses agree on many potential points of contention. Having a dissolution of marriage agreement that addresses every important point can go a long way to make the process as painless as possible.

A recent divorce case on appeal before Florida’s Fifth District illustrates this point. While married, the spouses owned a home together, and at the time of the divorce the home was encumbered by a mortgage under both spouses’ names. The trial court ordered that the former husband keep the couple’s home and that the wife execute a quitclaim deed to him, which would give him full rights to the property. Unfortunately, the order did not address the wife’s mortgage obligation. This would mean that if the husband failed to pay the mortgage the mortgagee could hold the wife accountable.

Florida follows the rule of equitable distribution, rather than community property. This means that in the event of divorce, section 61.075 of the Florida Statutes mandates that the couple’s property is fairly or equitably distributed. The presumption is that the marital property will be split evenly between the parties, but the court may divide the property unevenly based on several factors, including each spouse’s financial situation. The goal is for a distribution that is ultimately fair.

Generally, debts are divided in the same way as property: marital debts are divided with an equal starting point in mind, and separate debts are retained by each spouse individually.

Unfortunately, it is difficult to split some assets equally. Because houses, cars, and other physical objects can’t be cut in half, couples have a few options for their division. If the couple had equity in the property, the judge could order that the couple sell the house and split the proceeds. Other times, a court might order that one spouse keep the house.

In the case before the Fifth District, the trial court opted for the latter option, allowing the husband to keep the home. However, since it did not address the wife’s mortgage portion of the mortgage obligation — a debt that should have been considered — the Fifth District was forced to devise an equitable solution.

Ultimately, the Court of Appeal ordered that the husband attempt to refinance the property solely in his name. As a backup, the court also ordered that the amended final judgment include a hold harmless provision in the wife’s favor. The effect of the hold harmless clause is that if the husband is unable to obtain a mortgage in his own name, the wife could not be held liable for the debt in the event that the husband defaulted.

As exemplified by the case before the Fifth District, a dissolution of marriage order that contemplates every important point can avoid unnecessary complications and help the parties move on with their lives. The Southwest Florida divorce attorneys of Lusk, Drasites & Tolisano have helped numerous residents of Fort Myers, Naples and Cape Coral obtain equitable divorces. If you are facing divorce and would like to speak with one of our attorneys, call (800) 283-7442.

Related Posts:

Fourth District Court of Appeals Certifies Question Regarding Prenuptial Agreement to Florida Supreme Court, January 12, 2015

Florida Supreme Court Rules that Verbal Promises Regarding a Real Estate Contract Are Not Enforceable Unless in Writing, November 10, 2014

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