What is the Harm if I Remain on the Mortgage After the Divorce?
Posted By Posted by Robert Sparks on Nov 17, 2010 6:47am PST || Nov 17, 2010
Many Florida divorce cases are resolved through the execution of a marital settlement agreement, also known as an MSA. As part of the MSA, the parties establish the terms and conditions related to the division of their assets and liabilities. In a majority of cases a party's home is a significant asset (and liability) and therefore the division of the home is memorialized in the MSA.
Often times the parties come to an agreement whereby one party transfers their interest and ownership of the marital home to his or her spouse who will retain sole ownership of the home. A condition of the spouse receiving the home is that he or she will agree to remain responsible for all obligations and liabilities associated with the property and will agree to hold his or her former spouse harmless from said debts. The hold harmless clause may refer to obligations including any and all mortgages, lines of credit, property taxes, insurance, utilities, HOA dues, etc.
When entering into the MSA it is important to discuss the future ramifications of these clauses with your Tampa family law attorney. Your family law attorney should be able to address the risk involved if the MSA is written in such a manner where both spouses' names remain on the mortgage. This risk must be established and analyzed due to the fact that a Florida divorce and MSA will not bar a creditor or other third party lender from seeking legal action should a former spouse default on his or her responsibility. Even if the MSA spells out each parties' obligations regarding the payment of the mortgage the lender can seek damages against both parties which may ultimately lead to significant credit and financial issues.
Thus, there can be a hidden harm in leaving one's name on a mortgage after divorce. Because there are several other issues that need to be addressed when dealing with post-judgment credit issues it is highly recommend that each party to a divorce speak and consult with a Florida divorce attorney.