According to a report online, Bravo’s Real Housewives of New Jersey star Danielle Staub is facing the sale of her 7,500 square foot mansion that she currently shares with her youngest daughter and her estranged husband, Marty Caffrey. The former couple were married in May 2018, and Marty apparently filed for divorce in September 2018.
Unfortunately for Danielle, she didn’t even know that the home was being listed - Marty put it on the market without her knowledge or consent! With the success of the Real Housewives, I don’t think Danielle is hurting for money (the house is listed for $2,195,000), but having your soon-to-be ex-husband list your home for sale without your knowledge kind of sucks.
This begs some questions: (1) whether Marty can legally put the house on the market without Danielle’s consent; (2) whether Marty can legally sell the house without Danielle’s consent; and (3) the impact that the marital home has on a divorce in general.
As always, the point of view in this post is expressed from the perspective of a divorce attorney in the DMV.
Often times when a married couple is separating and heading toward a divorce, the marital home is the most valuable item of property to address. The list of available options, including what can happen to the marital home in a divorce and when it can happen, varies depending on several factors.
How is the marital home titled?
If you bought your house during the marriage, chances are your home is titled in both your and your spouse’s names as tenants by the entirety. Tenants by the entirety is a special type of joint property ownership that is allowed only between a husband and wife. It is not recognized in all states, but it is recognized in Maryland, D.C. and Virginia. Tenants by the entirety automatically have rights of survivorship. The surviving spouse immediately becomes the sole owner of the property when the other spouse dies.
Other types of possible ownership over your home are sole ownership, where either you or your spouse has exclusive legal ownership of the property; or a joint tenancy (either with or without a right of survivorship), where you and your spouse each have an equal ownership interest in the property. a joint tenancy
In the case of property owned as tenants by the entirety or joint tenants, neither you nor your spouse may list or sell the house without the knowledge and consent of the other, or a court order. If one party has sole ownership of the property, however, then that person may list and legally sell the house without the consent of the other.
Although you or your spouse may be able to sell the marital home without the other’s knowledge, it is generally a terrible idea to do so in the middle of a divorce, especially if there are children involved. For one thing, just because one of you may have sole ownership, that doesn’t mean the other doesn’t have a marital interest in the value of the house. If it is sold, the sole owner doesn’t just get to keep all the proceeds; they are still subject to division in the divorce case.
Additionally, if there are children involved and they are accustomed to living in the home, selling the home without approval of both you and your spouse will make the selling party look awful for child custody purposes. The court wants to see that parents prioritize the best interest of their children. Selling their home and uprooting them in the middle of a divorce shows the exact opposite.
Who is responsible for the mortgage?
Which party is responsible for the marriage will help determine what options are available to you. If both you and your spouse are listed on the mortgage, or if one of you is listed and the other wants to keep the home, then whoever is taking over the mortgage will need to qualify for a refinance to remove the other’s name and become fully liable. If the home is jointly titled, then the party relinquishing ownership will need to execute a deed conveying sole ownership to the other.
Is the home marital property, separate property, or part-marital and part-separate?
Classification of the home as marital, separate, or part-marital and part-separate will also affect the different options for what happens. Regardless of how the property is titled, if the home was purchased during the marriage with funds earned during the marriage or commingled with funds earned during the marriage, then it is marital. If it was purchased before the marriage with non-marital funds and titled separately, or acquired by an inheritance or gift, then it is separate property. If it was initially separate property, but refinanced during the marriage, it may have been transmuted into a marital asset.
Property is part-marital and part-separate in the situation when equity is created partially from separate funds and partially from marital funds. For example, if the home was bought before the marriage using a down payment from separate funds, and the mortgage was paid down during the marriage using marital funds, that will create a scenario where the home is part-marital and part-separate. In this case, an experienced divorce attorney will be able to gather the relevant documents and help calculate what portion of the home’s equity is marital and what portion of the home’s equity is separate.
Is there currently any equity in the marital home?
Equity in the marital home is determined by subtracting the current balance of the mortgage and any other liens against the home from the current fair market value. For example, if the home has a mortgage with a current balance of $500,000, and the current fair market value is $700,000, then the equity is $200,000 (i.e. $700,000 minus $500,000).
Sometimes, there isn’t equity in the home, or there is negative equity, meaning that the mortgage balance is either greater than or equal to the fair market value. In negative equity cases, either you and your spouse will need to sell and come to the closing with money to pay off the remainder of the mortgage, or one of you will need to take ownership of the home and refinance the mortgage. A third, and increasingly common option in a negative equity situation is a short sale.
Equitable distribution - refinance and buy out or sell and split the proceeds
Generally, there are two options for equitable distribution of the marital home. If you or your spouse is financially able, and wants to keep the home, then you may agree or ask the court to allow you to refinance any liens on the property into your sole name and buy out your spouse’s interest in the marital equity. Alternatively, you and your spouse may agree, or the court may order, that your home be sold and the marital portion of the net proceeds be divided.
If there isn’t an agreement on a buy out or sale, the court will usually (although not always) order the marital home be sold. The court doesn’t like to get involved in the logistics of refinancing a mortgage and transferring ownership when there is an option of selling, even if the sale will result in a loss to the parties.
If you and your spouse do agree on a buy out or sale, then the terms of the agreement should be laid out in great detail. Who pays the mortgage, utilities, taxes and insurance until the sale or refinance? Who selects the realtor? Who pays for repairs and improvements recommended by the realtor? Who sets the price, and how often should it drop? How are the proceeds divided? What happens if you are unable to refinance, or if the home won’t sell? Details make a huge difference in avoiding conflict if something doesn’t work out down the road.
Contact a Wayside Legal Divorce Attorney
These are only some of the common issues when dealing with the marital home in divorce cases. Wayside Legal LLC is an award-winning law firm located in North Bethesda, Maryland, with years of experience handling divorce issues, including equitable distribution, throughout Maryland, D.C., and Virginia. If you are facing a separation and divorce from your spouse, contact a Wayside Legal attorney today for a consultation to discuss your specific situation.