When parties are married and are going to be divorced, the real estate property which has been their marital residence must be treated in any kind of settlement or Judgment for their divorce. Illinois is not a community property, 50/50 division of property state. It is a state in which the division of real estate property is treated equitably, or fair, under the circumstances. What does this mean to divorcing parties? The proceeds may be divided in a number of ways, such as on a 50/50 basis, or 60/40 basis; again, the division must be fair under the circumstances under the division of the marital estate as a whole. This could mean that each of the different assets owned by the parties may be divided in different percentages.
There are a number of ways in which that property came to be their residence:
1. One of the parties could have owned the property prior to their marriage, in which case that could be that person’s non-marital property and not subject to any claims by the other party. Sometimes, though, the party that didn’t own the property prior to the marriage may have a claim to the property for contribution, such as, if money earned during the marriage or someone’s separate money was used to remodel the residence. Often, one of the parties owned the real estate prior to the marriage, but the parties refinanced the mortgage, and as a condition of the mortgage, both parties become owners of the property in a legally recorded deed. The general proposition is that the property is now marital property, subject to a claim by both parties.
2. During the marriage, the parties may have purchased a property together. When they do so, they may each have a claim to that real estate. In such a case, one party could “buy” the other party’s interest out so that he or she can retain the property individually. The buy-out can occur from cash or other assets which may be traded between the parties to effectuate the buy-out. Should such a buy-out take place, a court will usually review the amount of the equity in the house based upon the value of the house, minus the amount of the current mortgage. Note that if there is a buy-out by one party or the other, one of the conditions may be that the party retaining the house must refinance the property to take the other parties name off of the mortgage. A change on title and deed can put one party’s name on a deed on the property, but only a refinance can remove the other parties’ name from the mortgage. After all, the lender is not a party to the divorce. The parties’ agreement or judgment will state the facts, and may include language to protect the person being bought out, so that the party retaining the house will be responsible to pay for the current mortgage.
3. The Marital Settlement Agreement and Judgment may include a provision in which both parties agree to have the house sold and closed within a period of time. When that occurs, and unless otherwise agreed, the parties will each be required to cooperate to make sure the property sells and closes. There will be costs incident to that sale in which both parties may be responsible. Closing costs usually include real estate tax prorations, due to the cycle in which real estate property taxes are paid in Illinois, title insurance to guaranty the buyer gets clear title, survey (unless it’s a condominium), local municipal taxes (often called transfer stamps), and attorney fees.
It is important to state that when parties get divorced they do not necessarily have to buy or sell the real estate right away. It is possible to maintain a residence with one party staying in the house, being responsible for paying the mortgage and taking care of the upkeep and buy or sell the real estate in the future. It is more clean to conclude all rights and obligations to the house at the time of the divorce, but sometimes there are reasons in which this does not happen. For instance, parents often have concerns about children and where they will reside, or the ability to refinance is not readily available.
Divorce is often an emotionally draining time. Seeking the services of an attorney who is familiar with divorce law and real estate helps people understand the issues, ramifications and obtain reasonable results.