Financial troubles can be the cause of much stress for married couples. Often, these stresses lead to a couple separating, and ultimately, divorcing. In such situations, there will always almost be issues regarding the marital residence, be it a house or an apartment. Due to the financial issues, the property may already be in foreclosure. This blog post will explore the legal issues relating to married couples who own property which may be in foreclosure, and the issues that arise if a divorce proceeding occurs.
The first assumption is that the property in question is owned by both parties. The legal term for such ownership is tenants by the entirety. This means that the property is jointly owned by a married couple, and if either party passes away, their ownership share automatically passes to the surviving spouse. It should be noted that tenants by the entirety only applies to married couples. Once a divorce is finalized, the ownership interest changes to tenants in common, which means that the interest does not automatically transfer upon death to the survivor, but remains as part of the estate of the deceased.
Of course, when the parties are divorcing, the ownership of the martial residence is usually a major issue. If the property is in foreclosure, or is likely to become the subject of a foreclosure case in the near future, such issues must be addressed as part of the divorce proceedings. There are several possibilities in this situation. First, if there is equity in the property, and neither party wants to remain in the marital residence, the property may be sold, with the couple sharing the proceeds as per their divorce agreement. In the course of such a sale, any outstanding mortgage would be paid off, and any foreclosure proceedings would be discontinued as a result of such a sale. This is probably the easiest solution, although not always possible.