Issues Surrounding Jointly Held Property in Mediation

One of the most common issues discussed lately during mediation sessions with clients here at Equitable Mediation Services is how to handle the marital home.  With housing prices dropping like the temperature in February, divorcing couples are reluctant to sell the martial home right away and are looking to the their NJ divorce mediator to help them manage what can be an untenable situation.  Typically when couples divorce, the house is sold (if owned jointly) and the proceeds (typically there are proceeds but lately, not so much) are used to pay down marital debt or better yet, used to start a new life.  But what happens when the value of the home is less than what the couple paid for it or owe on the home?  In today’s unstable housing market, this is a more common situation than you think.

As part of our conversations on Equitable Distribution, the mediator works with the couple decide to draft an agreement that addresses how the house will be handled until such time it is sold.  When the house is sold as part of the divorce either the gain or the loss is divided among the parties as they have negotiated during mediation.  However, if one party chooses to live in the martial home post-divorce yet due to the economy, they choose not to sell the house, some complications can arise.

The first issue is that of maintenance.  One might think it fair that if someone is living in the marital home post divorce, they should make the monthly mortgage payment since it’s their place of residence and if they were renting an apartment, they would have to pay that.  So why not view the mortgage as “rent?”  Ah, but it’s not that simple.  What if the kitchen needs a new coat of paint?  Who pays for that?  The person living in the martial home or both of you?  If they didn’t like the color and chose to change it, is it up to them or is it the responsibility of both parties.  But what if the roof starts to leak and is in need of repair?  Who pays for that?

Next is the issue of equity.  When one makes a monthly mortgage payment, if you’re like most people, a portion of it goes to your taxes, a portion goes to interest and a portion goes to principal.  So what is actually happening is the person making the mortgage payment (even though both parties still technically own the home) is paying down the actual debt of the home so that upon sale, both parties benefits from a greater profit.  So, the person paying the mortgage makes the payment but both parties share the benefit. Does that seem fair?  Maybe if it’s for a shorter period of time but what if the market doesn’t turn around and the payments continue for 5 years and the mortgage gets close to being paid off?

Good question and one I can’t give you the answer to.

You see when using mediation services, it is my view that it is the mediator’s job to inform you of these issues and let the parties decide how they wish to handle them.  And while making you aware of the issue may not make either party change their mind regarding the outcome, it is by informing and empowering the parties to make decisions that work for them is one of the ways that makes mediation the smarter way to divorce.

If you would like to discuss your particular situation, we offer a free, no-obligation consultation in one of our six central NJ office locations or in the privacy of the marital home.  Please feel free to contact us today to learn how divorce mediation with Equitable Mediation Services can help you settle all the issues surrounding your divorce peacefully, efficiently and with as little stress to you and your family as possible.