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Potential pitfalls when keeping the home

Potential pitfalls when keeping the home after divorce

One of the most common disagreements among divorcing couples, along with issues of child custody and alimony, is who gets to keep the house. While it is perfectly understandable to be reluctant to give up one’s home, people going through divorce should be aware of some hidden costs they may not be expecting if they decide to keep the house.

Maintenance and Repair Costs

One common unexpected pitfall occurs when the spouse who keeps the home has not accurately estimated the monthly expenses involved in maintaining the home. While the mortgage payments, taxes and insurance premiums are all major elements in this calculation, it is important to consider other, less obvious expenses as well. This includes budgeting for major maintenance needs that occur regularly but infrequently, such as painting, plumbing, or landscaping.

In addition to predictable maintenance costs, homeowners must also budget for unexpected household expenses such as plumbing problems, roof damage, heating and cooling repairs and appliance replacement. While some unanticipated expenses like storm or fire damage may be covered by insurance, people planning to keep their homes after divorce must also factor in the cost of the insurance deductible when planning their budgets.

Liability for an Ex-Spouse’s Debts

In some divorce cases, both spouses keep their names on the mortgage even though only one spouse remains in the home. While this may be beneficial under certain circumstances, there are risks to be considered. Even if one spouse has agreed to pay the entire mortgage, both spouses may remain liable for the debt. Damage to credit scores can occur if the spouse who keeps the home is late on his or her mortgage payments or if the home enters foreclosure. Even worse, if either spouse files for bankruptcy, creditors could try to collect on his or her debts from the other spouse and could even put a lien on the home.

When planning to keep a home after divorce, it is also important to make sure that the title to the home is clear of any unknown liens or liabilities. Before making a decision about the division of marital property, a divorcing spouse who is considering staying in the marital home should conduct a title search to see if his or her ex has taken out a line of credit against the home, or if there are any liens on the land for unpaid debts. Similarly, a spouse who wants to keep his or her home after divorce should verify that the property taxes are up to date to avoid possible liability for tax debt that has gone unpaid in previous years.

Tax and Cash Flow Problems

Equity in a home cannot be used to buy groceries at the supermarket. Decisions about exchanging equity in a home for retirement assets should be made carefully as there are currently tax implications which can affect the future value of these assets.

Speak to a Lawyer

Despite the potential pitfalls, with thorough research and careful negotiation it is possible for a divorcing spouse to remain in the marital home and still get a fair settlement. For a more thorough discussion of the risks and how to mitigate them, people considering keeping their homes after divorce should speak with an experienced divorce and property division lawyer.

Lynn Landis-Brown, P.C., represents clients in the Pikes Peak area, Front Range area, and Rocky Mountain area of Colorado, including Colorado Springs, Castle Rock, Monument, Woodmoor, Broadmoor, Manitou Springs, Fort Carson, Fountain, Cimarron Hills, Black Forest, Canon City, Woodland Park, Cripple Creek, Victor, Parker, Pueblo, Peterson Air Force Base, Schriever Air Force Base, Cheyenne Mountain Air Force Station; United States Northern Command (NORTHCOM), Northern American Aerospace Defense Command (NORAD), United States Air Force Academy (USAFA), El Paso County, Teller County, Douglas County, Adams County, Elbert County and Fremont County.