Mistake #3: Your Spouse Has Not Refinanced
If one spouse retains the home, the agreement does not mean, absent more, the non-taking spouse is no longer liable to pay the home mortgage. The lender is not a party to your divorce, so the court cannot adjudicate the lender’s rights to repayment. Careful drafting in the settlement agreement, the decree and all related documents is an absolute must. These should, at a minimum, require the taking spouse to refinance the mortgage into the spouse’s name immediately; if that is impracticable, the spouse should have a continuing duty to apply for refinancing in good faith until successful and, in the interim, hold the non-taking spouse harmless for any mortgage default and the costs thereto (e.g., interest or penalties). They should specify each spouse’s responsibility for property taxes, insurance, homeowners’ association fees and any other liabilities until the home is refinanced or sold. They should specify what recourse the non-taking spouse has against the spouse in the event of default, such as liquidated damages, a default judgment equal to the amount of the mortgage or other liabilities, mandatory attorney fees and/or contempt.
Mistake #4: Your Spouse Is Still A Named Titleholder
Imagine the dismay (horror?) of discovering, on the eve of your home sale, that your ex-spouse from fifteen years ago is still a named titleholder on your deed records. To complete the sale, you need your ex to execute a quitclaim deed to you. But your ex absconded to Vegas a year after your divorce, and no one has heard from her since. Sound unbelievable? This happened to one of my clients, who was (understandably) disappointed to learn that we had to track down her ex-husband. She incurred attorney fees and deed recording costs for something that could, and should, have been resolved concurrently with her divorce. Whenever you award property to one spouse or to both spouses in a different format (e.g., as tenants in common rather than as joint tenants), be sure to execute deeds to effectuate the transfer in addition to the settlement agreement and the divorce decree. You need to have clear title. Ideally, these will all be prepared and ready for execution at the same time. If not, then your settlement agreement and your decree must require each spouse to cooperate to execute all reasonably necessary documents as soon as practicable and specify consequences for the uncooperative spouse. You should also inquire of your register of deeds or county clerk whether you can make your decree “in recordable form.” In Michigan, a judgment of divorce is recordable and, once recorded, serves the same purpose as a deed if it complies with certain format requirements, such as containing all of the property’s legal description. That way, parties can simply record their judgments in lieu of deeds when their ex-spouses abscond or refuse to cooperate.