Divorce and Property – 3 Options

Divorce, Owelty, Lis Pendens, and Your Options

During a divorce or after the divorce decree is completed, there are only 3 options you have in regards to what you can do with your mortgage and home. Cutting it in half is not one of them! Usually a divorce attorney will protect their client’s interest in the homesteaded property by putting a marital lien on the property in the form of an owelty or Lis Pendens. Lis Pendens is a more general term in the legal world, and basically it makes it public record that a property is the subject of a legal controversy, and therefore a title company would recognize this and not allow someone refinance or sell a home without authorization of the other spouse.

What is an Owelty?

 

You have only 3 choices for handling the primary residence during/after divorce:

1. Sell the house–  If neither spouse wants or can afford to keep the house, you can put the house on the market and sell it and split the equity.  The disadvantage to selling the house is paying Realtor and other costs upon selling, and forcing the kids to move during an already difficult time of their lives.
2. Negotiate a Buyout–  This option is a very popular choice for divorcing couples.  Here, the spouse keeping the home offers the spouse not keeping the home, a portion of the equity that is in the house…”buys out” leaving spouses equity.  This is the option where the Tx Owelty Refinance comes into play if the spouse keeping the house does NOT have the cash to pay the leaving spouse, or simply does not want to use their cash on hand to pay off the leaving spouse.  Many lenders and local large banks are not 100% confident in handling the owelty refinance, and this is why it’s important to use a Certified Divorce Lending Specialist to handle this.
3. Both continue to co-own the property–  If neither spouse is interested in selling the property, and you would like to keep it for an investment home or wait until the market is better before selling it, both can stay on the deed.   This is also an option when the home can’t be sold due to the fact that the value of the property is equal to or less than the current mortgage and neither spouse has the money or wants to have to bring money to closing to sell the house.

For more questions regarding divorce and your property, please view some of our videos as a well…videos on tx owelty mortgage refinance.