Language to use in decree When one party is being awarded a piece of real estate but the other party is on the mortgage.

IT IS ORDERED that within 8 months of the date of this divorce, JOHN SMITH will refinance the property commonly known as 1000 Sweet Ave, San Antonio, Texas 78259, such that any and all financial obligation of JANE DOE to the property ceases, and such that JOHN SMITH is the only remaining party responsible to pay any obligation on the property.  Within 30 days of the time that the property is wholly refinanced in accordance with this provision, JANE DOE shall execute any and all documents necessary to remove her name from the title of the property, if applicable.

IT IS FURTHER ordered that in the event that JOHN SMITH cannot, for any reason whatsoever, refinance the property in accordance with the above provision, that he shall instead place the property for sale with a real estate agent who works in the area of the property, and shall take all diligent and reasonable actions necessary to sell the said property.  IT IS ORDERED that in the event that the property is sold as per this provision, that JOHN SMITH shall receive 100% of the net proceeds of the property sold (the profit after he pays closing fees, transfer fees, and satisfies the applicable mortgage of the property).

Language to add to decree when one party is being awarded a piece of real estate but the other party is on the mortgage, when you represent the party who is not receiving the property–

IT IS FURTHER ORDERED that if any single mortgage payment is paid more than 30 days late from the time of this divorce, until the time that the property is refinanced, that upon such late payment, JOHN DOE shall immediately place the property for sale in accordance with the above sale provisions.

IT IS FURTHER ORDERED that JOHN SMITH shall pay all legal fees, damages and expenses that JANE DOE incurs as a result of the late mortgage payment including but not limited to damages to her credit, and any costs and/or legal fees associated with enforcing this provision of the decree.

Why Add Refinancing Language Into the Decree?

If both spouses are on the mortgage incurred during the marriage, and one spouse receives title to the property in the divorce, then the other spouse will still be left on the mortgage until the note is refinanced or the house is sold.  This will leave the spouse that did not receive the property at an ongoing credit risk, which is at the disposal of his/her ex.  Failure to pay the mortgage will harm the other’s credit.  And, because debt to credit ratio impacts one’s ability to get credit in general, the tied up mortgage will prevent the spouse from getting his or her own house.

The refinance language is the mechanism to ensure that the spouse who did not get the property, can get their debt free from the mortgage.

Getting Equity in Exchange For Awarding Title to Your Ex– Use an Owelty

If you and your spouse have an agreement that you will give your spouse the house, but you get a part of the equity from the house, then the proper method to accomplish this end is to use an owelty lien. This will protect your equity in the property.  Upon your spouse refinancing the home, you are paid back the amount of your owelty lien.

DivorceHomeLoans explains this option well on its website where they offer to do some refinancing services specifically for couples going through a divorce.