If you are a condominium owner in the Brickell area of Miami and are contemplating divorce, there are many issues you must consider that were not present just a few short years ago. A few years ago, with property values in Brickell soaring, anyone involved in a divorce was attempting to secure possession of the marital condominium or home. Because of the theory of equitable distribution, on which divorce is premised, any assets that have been accumulated throughout a marriage are owned on a 50/50 basis by the spouses. However, this also includes any liabilities, such as credit card debt, medical bills, loans, and a mortgage on a home.
For example, with property values in decline (especially, condominiums) throughout South Florida, notably Brickell, the value of your residence could be only a fraction of the initial purchase. As you are aware, your obligation to the bank (i.e. the promissory note) does not fluctuate with the value of the property. This means that if your condo was purchased for $400,000.00 in 2005, and now it is valued at $150,000.00, you and your spouse are responsible for whatever is left on the initial loan. So, in the example above, even if your condominium is worth less than what is owed on the mortgage, the borrowers are still responsible to the bank for the current balance.
In the event of a divorce, keep in mind that if both spouses have signed the promissory note at the initial purchase, they are both responsible for the debt. For example, the following is a common misconception: Husband and wife, after settlement negotiations, agree that the wife will keep the condominium. However, both parties signed the promissory note. Even though the husband deeds over the condominium to the wife, he is responsible for the debt in the event the wife cannot meet her mortgage obligations in the future. In order to remedy this, the husband will want to make sure that the wife can refinance the property so that he is no longer responsible for the debt. We have seen on numerous occasions where one party agreed to release their interest in a condominium to their spouse, only to be sued for foreclosure because the other spouse could not meet their financial obligations with respect to the mortgage.
If you or a loved one is contemplating divorce, please call the lawyers at Hutchison & Tubiana for a telephone consultation to determine your legal rights.
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