What happens when one spouse wants to keep the marital home in a divorce settlement, but the mortgage is underwater?
How is the negative equity handled in a divorce?
Unfortunately, this is a very common problem in Florida since approximately one-half of all Floridian homeowners are faced with this problem.
Florida law states that, unless circumstances warrant differently, spouses going through a divorce should each have an “equitable distribution” of the marital assets and liabilities. The Florida court steps are clear:
1. Identify Assets and Liabilities
2. Designate them as either marital or non-marital.
3. Equitably distribute them.
In a divorce settlement where one spouse keeps the marital home, and the home has positive equity, the amount of equity in the home is counted towards that spouse’s total share of assets. However, when a home is underwater, lawyers and judges are struggling with the question of whether to allow the amount of negative equity count toward the distribution of marital assets and who becomes responsible for the debt?
The country is under special economic circumstances and in an equitable asset distribution scenario, fairness may often require the totality of the circumstances to be weighed and that might not be equitable in many cases.
Divorce cases involving underwater mortgages can be challenging and that is why you need an experience attorney on your side.
At D’Lugo and DeFlora, P.A. in Kissimmee we look at every instance or scenario that looks like an impossible scenario to a client in Osceola County and see it as a challenge to overcome, and an opportunity to assist a client. There are risks and opportunities in every scenario or situation, so we make it a high priority to communicate and explain the details of legal decisions that are made. We are here to listen and advise. Call 407-870-5551 for a consultation. We’re here to help!