FORCED REAL ESTATE SALE IN NJ POST-DIVORCE ACTION

83987696_8Unfortunately in many divorce matters the parties are forced to sell the marital residence for a multitude of reasons. In most cases it is because neither party can afford the overhead expense of solely owning the marital residence.

There are some scenarios where the parties’ Property Settlement Agreement (an agreement which distributes all assets/liabilities accrued during the marriage) may state a date certain or other condition by which the marital residence must be sold or refinanced. By doing this, the parties are able to enter into a Judgment of Divorce and move forward with their lives. A problem arises when the ex-spouse fails to take the necessary steps, as agreed upon in the Property Settlement Agreement, to sell or refinance the marital residence by the required time.

A family court Judge is a Judge of Equity and may (at his/her discretion) use these equitable powers to force the sale of a marital residence.

A New Jersey Judge has now provided guidance to other family court judges for cases in which an ex-spouse, who remained in the marital home, fails to take steps to remove the other ex-spouse’s name from the mortgage in violation of a Property Settlement Agreement.

The Honorable Lawrence Jones, an Ocean County Superior Court Judge, stated that a breach of the Property Settlement Agreement can negatively affect the non-resident’s credit rating and the ex-spouse can be forced to put the house up for sale as a remedy. He further held that the affected ex-spouse can be given power of attorney to list the house, and that the person still living in the house can be forcibly removed if he/she makes any attempt to block or thwart the sale. The Judge stated that it is vital to consider the growing economic significance of credit reports, scores, and creditworthiness in people’s lives. The Judge added that the relevance of credit ratings following a divorce cannot be overstated and the court took judicial notice, as a matter of indisputable common knowledge, that a positive credit rating and score is one of the most valuable and important assets a party may presently possess.

In this case, L.H. and D.H. divorced in 2012 following a twelve year marriage. Under the terms of the Property Settlement Agreement, L.H. was allowed to remain in the marital home, provided that she refinanced the mortgage in her name only. The house had a market value of $230,000.00, and had an outstanding mortgage of $204,000.00.

L.H. never refinanced the mortgage although she made the monthly mortgage payments, with a few being late.

In 2014/2015 D.H. tried to get a mortgage for a home of his own, but found that his credit score, and ability to obtain a mortgage, was impaired because his name was still on the original mortgage.

D.H. filed a post-judgment motion requesting that L.H. be ordered to sell the former marital home, the mortgage be paid off and appointing him as attorney-in-fact to market and sell the house through a realtor and, if necessary, remove L.H. from the house.

The Judge in this case found that the plaintiff’s rights to own and possess the home were not independent of, but implicitly, inherently, and logically intertwined with her simultaneous obligation to refinance the mortgage as to remove defendant’s name from ongoing liability. The Judge added allowing L.H. to remain in the home has a negative effect on D.H. The Judge stated that a creditor is not bound by any divorce Property Settlement Agreement and can continue to hold both parties responsible for any unpaid balance.

The Judge stated that the plaintiff still has not refinanced and satisfied the note and mortgage which encumber defendant’s name and credit and that the marital home must be sold. The Judge added that the result is not unjust or unfair, since plaintiff has had three years to refinance but simply failed to do so.

The Judge gave D.H and L.H thirty days to agree on a realtor; and if unable to agree, they would be required to use Century 21 Realty. If L.H. failed to abide by the ruling, D.H. would be given limited power of attorney to execute a listing agreement.

In certain instances matrimonial law and real estate issues can become intertwined. The attorneys at Gale & Laughlin have decades of experience in both Real Estate and Matrimonial Law and can help guide you through these issues. Contact us today to discuss any issues you may have.

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