Ask Jonathan Breeden Anything: What Happens to the House in a Divorce?

Jonathan Breeden: [00:00:00] On this week’s episode of The Best Of Johnston County Podcast, we have a special edition episode that we call Ask Jonathan Breeden Anything. And on this episode my social media coordinator, Raena Burch, and I discuss what happens to a house in divorce. The house is part of the equitable distribution of the property where the court is attempting to divide things equitably.

But what can the court do as it relates to a house? What do courts often do as it relates to a house? If your name’s not on the deed, do you still own that house? And do you have an interest in it? And can you be evicted from the house as part of the divorce? So if you’ve ever had any questions about what happens to a house of divorce, we answer a lot of those questions in this podcast.

So listen in.

Welcome to another episode of Best of Johnston County, brought to you by Breeden Law Office. Our host, Jonathan Breeden, an experienced family lawyer with a deep connection to the community, is ready to take [00:01:00] you on a journey through the area that he has called home for over 20 years. Whether it’s a deep dive into the love locals have for the county or unraveling the complexities of family law, Best of Johnston County presents an authentic slice of this unique community.

 

Jonathan Breeden: Hello and welcome to another edition of The Best Of Johnston County Podcast. I’m your host, Jonathan Breeden, and on today’s episode, we’re doing another special edition episode of The Best Of Johnston County Podcast that we call Ask Jonathan Anything where I, Jonathan Breeden answer Common family law questions that we get every week here at the Breeden Law Office for you so to put the information out there and this week’s episode is gonna be on houses and what happens to houses in divorce, they are often the largest single asset and lots of different things can happen including, what kind of realtors should you look for? What realtor? What, what are some of the mistakes realtors tend to make?

Things that you should be looking out for, if [00:02:00] and when you are gonna be dividing a house in a divorce. Normally on this podcast, I, Jonathan Breeden interview interesting community members and community leaders within Johnston County and small business owners. And we find out what they love about Johnston County and the services they provide, and we try to educate the public a little bit about what they do.

The purpose of this podcast is to put out a lot of positive information about Johnston County, it’s citizens and businesses so that everybody will know that they don’t have to go to Raleigh and shop. They can shop right here and get whatever they need right here in Johnston County from your friends and neighbors.

But before we get to this week’s episode on what happens to your house in a divorce? I would like to ask you to like, follow, subscribe to this podcast wherever you’re seeing it, whether it be on Apple, Spotify, YouTube, TikTok, LinkedIn X, or any of the other social Instagram or any of the other social media channels of The Best Of Johnston County Podcast. Best Of Johnston County Podcast comes in every single Monday. It has now for over 20 months, and we [00:03:00] want you to be aware of all future episodes of The Best Of Johnston County Podcast and you, you’d be kind enough to share it

 

Jonathan Breeden: with your friends and family members who might find it interesting and also tag us in your Instagram stories Best Of Johnston County that will help us grow the reach of this podcast.

Welcome Raena.

Raena Burch: Hi. All right, so all things houses in divorce, right?

Jonathan Breeden: Okay.

Raena Burch: Like you said, it’s, it’s usually the largest single asset that any couple has.

Jonathan Breeden: Correct.

Raena Burch: Okay, so first question. What. Do what realtor do they look for? Do they ha do they need separate realtors? Like they need separate lawyers? ’cause you know, one lawyer can’t represent two people.

Jonathan Breeden: Well, I mean, the first question, you know, before we get to the realtor really is, is the house going to be sold?

Raena Burch: Okay. That’s true. Yeah. So, ’cause house is,

Jonathan Breeden: sometimes the house is not sold.

Raena Burch: Okay. Yeah.

Jonathan Breeden: I would say the house probably gets sold in half the divorces we do.

Raena Burch: Okay.

Jonathan Breeden: And then the other half, one side figures out a way to refinance it and buy out the other side.

Raena Burch: Got it.

Jonathan Breeden: [00:04:00] So a house is, so under North Carolina law, the court’s job, when people are going through a divorce is to equitably divide the property. They call it equitable distribution.

Raena Burch: Yes.

Jonathan Breeden: It’s under NC General Statutes 50-20.

Raena Burch: Okay.

Jonathan Breeden: You can just search it right in Google, pull up. It’s not a very long statute and it’s not written in. I think a lot of people think the statutes are written in Spanish or French. They’re not. They’re fairly clear.

Raena Burch: Yeah.

Jonathan Breeden: But the job of the court is to equitably, divide the property

Raena Burch: Equitably.

Jonathan Breeden: Maybe not equally. Golly, no. Right, there’s a difference. But the vast majority of the time, they’re trying to make sure each side gets 50% of the property. And the largest single asset of most divorces is the equity in the marital home.

Raena Burch: Okay.

Jonathan Breeden: There’s lots of other assets that be divided. 401(k)s, cars, boats, vacation homes, timeshares.

Raena Burch: Yes.

Jonathan Breeden: Gold, Bitcoin, I mean, lot of things.

Raena Burch: Yeah.

Jonathan Breeden: But for a lot of people it’s [00:05:00] going to be the house. And if the house isn’t first, it’s gonna be second behind the 401(k) or the IRA or the retirement accounts.

Raena Burch: Yes.

Jonathan Breeden: All, you know, most of the time. So what happens to the house? Depends because if you can figure out a way to equitably

Raena Burch: mm-hmm

Jonathan Breeden: solve it where that one side gets the equity out of the house and the other side gets something comparable.

Raena Burch: Yep.

Jonathan Breeden: So let’s say there’s 150,000 of equity in the house.

Raena Burch: Okay.

Jonathan Breeden: The equity in the house is defined by what it is worth minus what is owed.

Raena Burch: Yes.

Jonathan Breeden: So if you sold it, if you went to the closing table, how much money would the two spouses get?

Raena Burch: Yes.

Jonathan Breeden: That is total.

Raena Burch: Total. Yes.

Jonathan Breeden: After you pay the realtor, after you pay the,

Raena Burch: yep. Closing fees

Jonathan Breeden: closing fees, or whatever it is, what is your check?

Raena Burch: Yep.

Jonathan Breeden: That is the equity in the how in in, in the marital hole. So, and so, [00:06:00] and sometimes there’s $150,000 on a 401k. There’s $150,000 of equity in the house, and people say, okay, we’ll call it good.

Raena Burch: Yep.

Jonathan Breeden: The issue with houses becomes the loan is 95% of the time in both names.

Raena Burch: Yes.

Jonathan Breeden: And it, I don’t care if you’re divorced, separated, whatever that does, the divorce does not get you off of the mortgage.

Raena Burch: Mm-hmm.

Jonathan Breeden: That is a contract with the bank.

Raena Burch: Yep.

Jonathan Breeden: Where they have put a deed of trust on your house and they don’t care if you’re married or not.

Raena Burch: Yeah.

Jonathan Breeden: You are obligated to pay the bank for the money they loan for that house and the divorce does not end that contractual obligation.

Raena Burch: Yes.

Jonathan Breeden: So the issue becomes not only do we have to figure out how we’re gonna deal with the equity in the house and is there an asset to offset it?

Raena Burch: Yeah.

Jonathan Breeden: Can the person keeping the house refinance it and get a mortgage in their name

Raena Burch: and afford it

Jonathan Breeden: and, and be able to [00:07:00] afford it?

Raena Burch: Yeah.

Jonathan Breeden: So that. I am, if I, if I’m the spouse leaving am released from that deed of trust, I’m released from that debt, which then allows me to go buy another house.

Raena Burch: Yes,

Jonathan Breeden: it is gonna be very hard for the vast majority of people to go buy another house while they’re still on the loan. I mean, you know, most of these houses out here are four, five, $600,000.

Raena Burch: Yeah.

Jonathan Breeden: You know, I’d say probably the average mortgage we’re seeing is about 300,000 is owed and the houses worth about 4, 4 50. Most times if they’ve been in the house for a few years, there’s a hundred, 150,000 of equity in it.

Raena Burch: Mm-hmm.

Jonathan Breeden: And you know, if I’m on the hook for 300,000 for you and I make $90,000 a year.

I’m not getting another four, three or 400,000 loan.

Raena Burch: No.

Jonathan Breeden: And so, so that’s where, you know, that that’s an important part of what we’re gonna do with the house as well, because not only do we either, if we can’t offset it, then the other question becomes not only do you have to be able to refinance it, you have to be able to do a cash out [00:08:00] refinance, Raena.

Raena Burch: Oh.

Jonathan Breeden: So, because then if there’s no, if there’s not another 150,000 to offset the 150,000 equity in the house. Then you’re gonna have to hand me $75,000 in cash to equal it out.

Raena Burch: Mm-hmm.

Jonathan Breeden: Which means not only do you have to be able to refinance the house, you’ve gotta be able to qualify to cash out refinance, which means you have to, let’s say you owe 300, you have to be able to borrow individually 3 75.

Raena Burch: Okay.

Jonathan Breeden: To give me my 75.

Raena Burch: Mm-hmm.

Jonathan Breeden: And interest rates went up two or three years ago, and most of these houses are down 3%. Now the rates are six, seven.

Raena Burch: Yeah.

Jonathan Breeden: Depending on where you’re looking and what day of the week it is.

Raena Burch: Yeah.

Jonathan Breeden: And that’s a huge difference.

Raena Burch: Extremely. I mean, it’s double. It’s double and it’s, you know, like you said, maybe 50% of maybe a little over 50% they have to sell the house and the other half that they don’t. So when they don’t have to sell the house and they can [00:09:00] offer, so they either have to do the cash refinance or hopefully have other assets that they can basically liquidate. Right?

Jonathan Breeden: Right, or trade.

Raena Burch: Or trade.

Jonathan Breeden: Or trade.

Raena Burch: So yeah, like you said, if, you know, if there’s 150 in a 401(k) and 150 of the house, one person says, okay, I’ll keep the 401(k).

And one person says, okay, I’ll keep the house.

Jonathan Breeden: Right. You got it right. And and we’re simplifying this.

Raena Burch: Very much.

Jonathan Breeden: Very much because you gotta get into cars.

Raena Burch: Yes.

Jonathan Breeden: Furniture collectibles. You know, there’s a lot TSPs.

Raena Burch: Yeah.

Jonathan Breeden: Pensions.

Raena Burch: Militaries.

Jonathan Breeden: Right like we are, we are simplifying this down for this podcast. We don’t have five hours. We try to leave these to about 20 or 25 minutes, but right. Like, you know, but let’s say it’s, we’ve gotten it and it’s every, all things being equal, there’s a house to 401(k). You sort of, sort of swap it that way because what we’re gonna do is we’re gonna take your assets and we’re gonna make an accounting spreadsheet and we’re gonna put all the assets and all of the debt.

And the debts have to be divided too.

Raena Burch: Yes.

Jonathan Breeden: And so, you know, most cars are upside down if they’re not paid for. Credit cards are unsecured debt.

Raena Burch: [00:10:00] Yep.

Jonathan Breeden: They gotta be counted too. But this podcast is really supposed to be focused on houses. Yes. So we’ll get back to the house. So, so if you can refinance it, you know, even at what is owed, even if you’ve got something else to offer.

As for that, the other side’s, equity, you know, the interest rate still almost certainly gonna be higher than the one you got.

Raena Burch: Yes,

Jonathan Breeden: because the interest rates went up so much two or three years ago and they haven’t come back down. They may not, and I don’t, they may start to come down a little bit later in 2025 and early 26.

But we’re, it may, it’s gonna be a long time before we see three and a half, 4% again, so I believe so.

Raena Burch: Yeah. Especially around here for sure.

Jonathan Breeden: Right, right. I just don’t think that that the, the rates are gonna come down that far.

Raena Burch: No.

Jonathan Breeden: So, you know, all of that being considered, but a lot of times when the house is having to be sold, we’re in a situation where they cannot refinance it.

Raena Burch: Mm-hmm.

Jonathan Breeden: One, neither party can refinance it.

Raena Burch: Yeah. That’s

Jonathan Breeden: or the husband has left and he probably could [00:11:00] refinance it, but he is already rented, living somewhere else. Whatever wife’s in it, she would rather die than have him get it back. You know what I’m saying? He’s established somewhere else.

She’s not gonna be able to do it. So then we look to try to get the house sold. And so that’s what we’re talking about this.

So the first thing that becomes important when a couple is going through a divorce and they’re gonna have to sell the house, is that, well, I would like to see before they get to the realtor, they have an agreement on how the proceeds are gonna be split.

Raena Burch: Yes.

Jonathan Breeden: I think it makes the realtor’s job very difficult. If they do all this work and the closing’s being held up because we don’t know who’s getting what money or whatever. Now attorneys can with orders of the court or contracts, so the parties agree to hold the money and their trust account until the court decides who gets it.

I’ve done that many times, supposed attorneys prefer not to.

Raena Burch: Yeah.

Jonathan Breeden: I don’t mind doing it, but I do think it’s important [00:12:00] that as you go to search for a realtor. That you do try to come up with some idea of what we’re gonna do with the proceeds so that when you meet with the realtor, the first thing they’re gonna do is give you a, what we call a CMA or a comparative market analysis.

Raena Burch: Oh yeah.

Jonathan Breeden: At the initial meeting with the realtor, and then that’s gonna show you what they think your house is worth based on other houses that have sold in your neighborhood, often in your neighborhood with all the turnover here.

Raena Burch: Yeah.

Jonathan Breeden: And they’re gonna ask you for your mortgage statement so that they can see what you owe.

Raena Burch: Yep.

Jonathan Breeden: And then they’re gonna do a calculation right there in the packet that says if we sell it for 400 and my fee is my fee, and the other side’s fee is 6%. And you pay these costs, you’re gonna pocket the, there’s should be 3 75 and you owe 300 according to this mortgage statement. So you’re gonna get about $75,000.

And if we’re gonna split it equally, each side’s gonna get whatever that is, [00:13:00] 37, $37,500 right, you know what I’m saying?

Raena Burch: Yeah.

Jonathan Breeden: So I would say in going to select a realtor, if the two of you can agree on who’s gonna get the proceeds when it sells before you see the realtor, that would be good. But if you can’t, you still need to work on selling the house. But you need to disclose that to the realtor when you meet with ’em.

Raena Burch: Yes. And so. Back to my, my first question did, so it’s one realtor, or is two? Two. ’cause like it’s one realtor.

Jonathan Breeden: One realtor.

Raena Burch: Okay.

Jonathan Breeden: One realtor. Right, right. And both of you should meet with the realtor. And, and if, and if you’re not getting along, you can meet with ’em separately.

Raena Burch: Mm-hmm.

Jonathan Breeden: But hopefully you can meet with ’em in the same place.

Raena Burch: Yeah.

Jonathan Breeden: And see how they would market your house, see what value they would get. Pick a realtor that’s actually selling houses, not somebody who has a real estate license, who’s also working full-time doing something else.

Raena Burch: Yeah.

Jonathan Breeden: Like go with a, a realtor that is. That is, this is their full-time job. They’re selling houses all the time. They got time to make sure your house is shown and your house is [00:14:00] marketed the correct way.

Raena Burch: Yes.

Jonathan Breeden: You know, everybody trying to save a few bucks, maybe a lower percentage, but go over a realtor that’s actually selling houses. I, I don’t know what percentage of realtors never don’t sell a house in a year, but it’s a lot like there are, a lot of people have real estate licenses. So pick a realtor who’s selling houses.

Raena Burch: Yes.

Jonathan Breeden: But also, make sure that when you, y’all agree on a realtor that you both sign the listing agreement.

Raena Burch: Yes.

Jonathan Breeden: And the listing agreement is gonna say if they bring you a full price offer, which happens all the time around here,

Raena Burch: especially here,

Jonathan Breeden: sometimes more than full price.

Raena Burch: Mm-hmm.

Jonathan Breeden: That was the real thing back a few more years ago now. They still, they do get a lot of full, still get a lot of full price offers, even though the market’s a little softer than it was in Johnston County. Then you owe them the commission. If you don’t sell the house, it’s in the small print.

Raena Burch: Oh, that’s a good, I did not know that.

Jonathan Breeden: Yes, yes. So if the house is listed for 400,000 and they bring you an offer for 400,000 and you turn it down, you owe them their [00:15:00] commission.

Raena Burch: Okay.

Jonathan Breeden: And so a lot of times you get, people say, okay, we’re gonna sell the house, or whatever, and then the spouse that’s in it. Doesn’t actually wanna sell the house.

Raena Burch: Yeah. They have to look like they do.

Jonathan Breeden: They have to look like they do because maybe the court ordered the house.

Raena Burch: Yes.

Jonathan Breeden: You know, they agreed in a consent order that the house be sold.

Raena Burch: Yep.

Jonathan Breeden: Now judges don’t order houses sold, but people can agree to order

Raena Burch: Yes.

Jonathan Breeden: To sell the houses you know, that kind of stuff. And so that’s an issue. So, you know, they bring you a full price offer. You know, you owe ’em the commission. If you don’t accept it, so, okay.

Raena Burch: That’s good to know.

Jonathan Breeden: Yeah. Keep that in mind. Right, definitely keep that in mind. Right. And get a lot of full price officers in Johnston County.

Raena Burch: Yes. So are there certain, ’cause like I know you mentioned, you know, have it in a consent order or a separation agreement, or hopefully you know how you’re going to divide the proceeds, but what about the conditions of the sale?

So you know, if this person is, if they come with a full price offer, but there’s all these conditions, are they allowed to say no? Or if it’s within 3%, how does, like, how do the conditions work?

Jonathan Breeden: Right. Well, [00:16:00] I mean, the con I mean, the conditions you have to agree to accept the conditions.

Raena Burch: Yes.

Jonathan Breeden: Right. You know, and sometimes there are contingent offers. You know. If you don’t have to accept a contingent offer, you know, you definitely can take backups on that. You know what I mean?

Raena Burch: Yeah.

Jonathan Breeden: You know, and realtor probably better to explain that.

Raena Burch: Yeah.

Jonathan Breeden: And we’ve had realtor you know, we had Donald O’Meara on a few episodes ago.

 

Jonathan Breeden: And we will probably have some other realtors in the future. But I do think that it’s important that when you meet with the realtor, that both sides agree. That the side living in the house is gonna keep the house in a showable condition. They’re gonna clean it up. They’re gonna make it available to be shown.

It’s very important.

Raena Burch: Yes.

Jonathan Breeden: As long as they get at least 24 hours notice.

Raena Burch: Okay.

Jonathan Breeden: That they’re not gonna be difficult and say you can’t come see the house.

Raena Burch: Yeah.

Jonathan Breeden: ‘Cause the is to get the house sold. And you want to see if you have an agreement, whether it be a separation agreement or a court order to sell the house, you would like to see the terms in it. Particularly if you’re the person not in it and you want the money and the person in it may. Kind of [00:17:00] want the money, but kind of doesn’t wanna move.

Raena Burch: Yep.

Jonathan Breeden: Because it’s in a lot of cases, the, the husband’s moved out. He’s paying that mortgage

Raena Burch: Okay.

Jonathan Breeden: While paying rent somewhere else.

Raena Burch: Yeah.

Jonathan Breeden: And he needs all he does, he can’t really afford both.

Raena Burch: Yeah.

Jonathan Breeden: And the wife is living there and she doesn’t wanna sell the house. She doesn’t really wanna move. She doesn’t buy selling the house. She’d like to have the money, but she really doesn’t wanna move.

Raena Burch: Yeah.

Jonathan Breeden: And so,

Raena Burch: well, I mean, mean the movie’s not fun for anybody.

Jonathan Breeden: Good. The movie’s not fun for anybody, but, but you definitely wanna make sure the house, that the side that’s in it is gonna agree. That it’s gonna be in a showable condition, that they’re gonna make it available to be shown with 24 hours notice that we’re gonna accept any full price offer unless both sides agree to counter.

Raena Burch: Yep.

Jonathan Breeden: And you probably want, if you think the other side is not gonna be a motivated seller, you’re supposed, you’re both supposed to act a motivated sellers, but my experience has been the person in the house may not be as motivated. Is the person not in the house?

Raena Burch: Yeah.

Jonathan Breeden: You want to maybe get an agreement in the separation agreement or the consent order with the court that says that you will accept any offer within 3% of the current list [00:18:00] price at the time.

Raena Burch: That’s key.

Jonathan Breeden: Unless both parties agree to reject it.

Raena Burch: Yep.

Jonathan Breeden: Because everybody, well, well, you come and it’s, say your office. The office 377 is listed 380. And that’s the best you’re gonna do for whatever reason, by that buyer. And the other side’s sitting there going, well, I’m only accepting a full price offer. You know what I mean? Because they don’t really wanna sell.

Raena Burch: Yeah.

Jonathan Breeden: And maybe the house is overpriced. Maybe it’s got problems. It’s gonna keep it from getting to a full price offer, which is just another way to prevent the house from selling.

Raena Burch: Yes.

Jonathan Breeden: And you having to move.

Raena Burch: Yep.

Jonathan Breeden: So you wanna make sure you get that provision in there. You also wanna provision your separation agreement or your property consent order, ed consent order with the court that the price will drop one to 3% every 90 days. It’s on the market automatically.

Raena Burch: Okay.

Jonathan Breeden: So if it is overpriced, it will come back into a price range where it may sell.

Raena Burch: Yes.

Jonathan Breeden: Particularly if you’re dealing with. One side, Hey look, [00:19:00] we just did a case where the husband’s in the house, he’s paying the mortgage, he can’t really afford it, and the wife is not in the house, and she’s rejecting offers that are pretty close to full price because she wants more money and they walked for some offers and six months later they got like 15,000 less.

Raena Burch: Ooh,

Jonathan Breeden: that’s and that husband was stuck there paying that mortgage.

Raena Burch: Yeah.

Jonathan Breeden: And, and it was tough.

Raena Burch: Yeah.

Jonathan Breeden: I mean, and so, so you know, the next offer’s not always gonna be better.

Raena Burch: Yep.

Jonathan Breeden: You know, I’m not trying, I’m just saying like, so you gotta, you gotta look at that as well. So these are things that couples could, could consider for sure.

Raena Burch: Yes.

Jonathan Breeden: It needs to be in s showable condition. You need to take any offer within the list, within 3% of the list price, the price needs to drop automatically. These are in the high conflict ones where you don’t have an agreement, and one side may not be acting as a motivated seller, even though they should.

Raena Burch: Yep.

Jonathan Breeden: So to support it, the other thing you want to do is you wanna make sure that your realtor. It’s communicating with both parties simultaneously?

Raena Burch: Yes.

Jonathan Breeden: [00:20:00] Or if there’s a restraining order almost simultaneously.

Raena Burch: Yes.

Jonathan Breeden: So that everybody is getting the same information. It’s very easy. Everybody get a login to the multiple listing service site.

Where I think is where the realtors that show the house put their comments in.

Raena Burch: Mm-hmm.

Jonathan Breeden: Love the house, didn’t like the carpet. You know?

Raena Burch: Yeah. You know what? You know what? What the feedback that they’re getting.

Jonathan Breeden: Right. Getting the feedback. Yeah. They’re going there to look at that, see how many times it’s shown.

So many times it was request to be shown.

Raena Burch: Yep.

Jonathan Breeden: See how many showings were rejected. Everybody needs to be access to that and sort of be on the same page.

Raena Burch: Mm-hmm.

Jonathan Breeden: So that everybody’s operating with the same information.

Raena Burch: Yes.

Jonathan Breeden: In the sale of what is probably their largest single asset.

Raena Burch: Yes. So for those who, ’cause like obviously a, a separation agreement is just a, an agreement between two people, right. That has nothing to do with the court. They usually do it, just the two of them. Like

Jonathan Breeden: But it is a valid contract.

Raena Burch: It’s a valid contract if it’s

Jonathan Breeden: signed and notarized. Yes. And it’s got the formalities of a contract. Yes.

Raena Burch: And like you said, a court cannot order anybody to sell the house, but [00:21:00] they can order them to pay out the other side.

Jonathan Breeden: Right. Right. So, right. So, right. And 99.999% of the time a North Carolina court is not gonna order a house sold.

Raena Burch: Okay.

Jonathan Breeden: What the North Carolina Court will do. And, and I used to say never, but then there was a couple cases, like never from the western, well, from the western part of the state.

Yeah. And the court of Appeals sort of let it go, but. So that’s why I now say, ah, 99.99% of the time, the court is not gonna order a house sold.

Raena Burch: Yeah.

Jonathan Breeden: Okay. What the court is gonna do is they’re gonna award the equity to one party or the other and order. The party that gets the house with that equity to pay the other side their share,

Raena Burch: yes.

Jonathan Breeden: They don’t care how it gets paid, but if, but if you owe me $75,000 and you don’t wanna sell the house and you can’t redo a cash out, refinance, the court is going, if we go have a trial and. And that’s the asset.

Raena Burch: Yeah.

Jonathan Breeden: The court [00:22:00] is gonna say, you Raena Burch owe Jonathan Breeden $75,000 and it’s due payable in 90 days.

Raena Burch: I gonna say they’re gonna give you a deadline. Right,

Jonathan Breeden: right. Well, Raena Burch might not have $75,000 in cash. Not in 90 days, just in nine. Right. So what are you gonna do? You’re gonna sell the house. That’s how you’re gonna get the cash out. Right. So there, there’s one of the angles that, that, that’s how the court gets around it.

Raena Burch: Got it.

Jonathan Breeden: Here’s the other trick. If the court. If you can pay me out Raena because you have cash or equity somewhere else. Yeah, they don’t order the house refinanced so you can pay me out. You’re good with the divorce court?

Raena Burch: Mm-hmm

Jonathan Breeden: But I’m still on the mortgage.

Raena Burch: Oh.

Jonathan Breeden: Because the court does not order the house refinanced.

Raena Burch: Okay.

Jonathan Breeden: It orders me to get my equity, but it doesn’t get into the contract. So I may have gotten my equity and still be on your mortgage and responsible for that debt.

Raena Burch: Okay.

Jonathan Breeden: Which is why couples need to settle.

Raena Burch: Yes.

Jonathan Breeden: The house, [00:23:00] however you need to do. You don’t want to go try the house to a judge because the judge isn’t gonna order it refinanced, and the judge isn’t gonna order it sold.

And so if you wanna make sure you get the terms that it either gonna be refinanced or sold so often, we’ll do both. We’ll give one spouse that’s in the house if they want to keep it. 90 to 120 days to refinance it. And if not, they place it on the market. If they can refinance it before it sells, while it’s on the market, they can keep the house.

Raena Burch: Mm-hmm.

Jonathan Breeden: But it does give me the non, if I’m not living there, some certainty that I’m gonna get off of the loan and I’m gonna get my money.

Raena Burch: Yes.

Jonathan Breeden: In a somewhat defined period of time, the average home is on the market, I think now in Johnston County about 31 days.

Raena Burch: Yes. Not that long.

Jonathan Breeden: It’s not that long,

Have family law questions? Need guidance to navigate legal challenges? The compassionate team at Breeden Law Office is here to help. Visit us at www. breedenfirm. com for practical advice, resources, or to book a [00:24:00] consultation. Remember, when life gets messy, you don’t have to face it alone.

Raena Burch: I say. So here’s a question like you said, if so, they stay on the mortgage ’cause the house hasn’t been refinanced. They get their half or share of the equity but what about if that homeowner right then goes and sells the house 10 years later? Do you get half of the equity again?

Jonathan Breeden: No, because you, when the court, when you get your equity out, you are, you have to sign a deed for your ownership interest in the house.

Raena Burch: Got it.

Jonathan Breeden: To the other side. You do a quick claim deed to the other side.

Raena Burch: Okay.

Jonathan Breeden: But it doesn’t cancel the mortgage but the bank, until it is sold and it’s paid off. But now what we get at least once a week, if not twice, is a call that says my husband and I divorced 10 years ago. We never dealt with the house.

I have been paying the mortgage for 10 years. His name is on the house. Often still [00:25:00] on the mortgage. And I would like now to sell the house. And he says he gets half of the equity now, and that’s true.

Raena Burch: Yeah.

Jonathan Breeden: Because he was still responsible for the loan during that period of time, even if he’s not, because his name’s on the deed.

Raena Burch: Yep.

Jonathan Breeden: So that’s his house.

Raena Burch: Yep.

Jonathan Breeden: And we have seen many cases, 10, 15, 20 years later. Where the spouse that left but never got off the deed.

Raena Burch: Mm-hmm.

Jonathan Breeden: Got paid hundreds of thousands of dollars in equity that grew because of passive increases. Because of where it sits in Johnston County.

Raena Burch: Yep.

Jonathan Breeden: And active increases because the other side paid the mortgage off. We did that case one time.

Raena Burch: Oh wow.

Jonathan Breeden: They separate, they owe 150 by the time they call me. There is no mortgage. But that guy gets half the day it is sold because you have no way to compel him to show up into the closing because you’re divorced and the courts are out of it, right?

Raena Burch: Yep.

Jonathan Breeden: We’re just joint owners, like we’re friends and we [00:26:00] bought an investment property.

Raena Burch: Yeah, we bought a house together.

Jonathan Breeden: Right? So it is,

Raena Burch: okay. So that,

Jonathan Breeden: keep that in mind.

Raena Burch: That’s if they’re on the deed.

Jonathan Breeden: They gotta be on the deed.

Raena Burch: On the deed.

Jonathan Breeden: On the deed. But if

Raena Burch: they’re just on the mortgage.

Jonathan Breeden: That,

Raena Burch: that it’s all risk, no reward,

Jonathan Breeden: correct.

Raena Burch: Basically. Correct. That’s exactly right.

Jonathan Breeden: That’s exactly right.

Raena Burch: Got it. Okay.

Jonathan Breeden: That’s exactly right. All risk, no reward.

Raena Burch: All risk, no rewards. All right, and so back to like the, the separation agreement contracts, whatnot, can they put in the separation agreement that if they, I mean, obviously they agreed it’s an agreement between two people, that they’re going to go by whatever the realtor suggests as far as list price, as far as how often they should drop the price, what repairs they need to make? ‘Cause repairs is another big one that people fight about.

Jonathan Breeden: That is true. And yes, you can put in there that you will file the, the recommended terms. You’ll do what the realtor says. You can put in your separate agreement or consent order who the realtor will be.

If you cannot agree, you could put in there that the husband will pick three realtors and then the wife will pick one of the three. The husband picks or [00:27:00] there’s different ways like that. If you’re in active litigation, you can go to the courthouse and the judge will pick a realtor. Usually somebody the judge knows or they’ve used or a friend of theirs in the community, you know what I mean?

Raena Burch: Somebody who’s an actual realtor.

Jonathan Breeden: Right, right. But the judge is definitely gonna pick an actual realtor to sell houses.

Raena Burch: Yes.

Jonathan Breeden: So, so right, so there’s, so there, so there is, there is that, there is that as well. And you know, if you go back and you think about, a divorce does not end your ownership of the house on the deed, and it does not cancel the mortgage. So, you know, as you’re listening to this, like, what are these guys talking about? Like, it doesn’t have anything to do with, with ownership of that piece of property because it has its own title.

And it doesn’t have anything to do with that mortgage because that’s its own contract with the bank.

Raena Burch: Mm-hmm.

Jonathan Breeden: And so I think people think when they get divorced and, and they’re just living it out, that’s their house. Well, it’s not your house until you get the deed solely in your name.

Raena Burch: Yes.

Jonathan Breeden: And so the court, the other problem that happens is property distribution has to be settled or pending on the date of divorce in North Carolina for the court to maintain jurisdiction to [00:28:00] divide the property.

Raena Burch: Okay.

Jonathan Breeden: The problems I was just telling you about is people that just did a uncontested divorce themselves never dealt with the house or the property. Now the court has no jurisdiction. At all to be able to go back and divide up the equity in that house.

Raena Burch: Yeah.

Jonathan Breeden: Once you’re divorced and the action is not pending, you become a joint tenant and joint tenancy has no marital component at all.

Raena Burch: Now you’re in litigation court

Jonathan Breeden: and we’re co-equal owners. Yeah.

Until it is sold.

Raena Burch: Yep. So, yeah. And then I’m assuming that would just go to contract court at that point and just Well, there’s that, well, there’s, if there’s a dispute. Right.

Jonathan Breeden: Well, and you can also do a parti, one joint owner can petition to partition the property. Yeah. Where they ask that it be, that it be that, that they get their equity out and they can ask the clerk to order it sold on the courthouse steps because y’all can’t agree to list it.

Raena Burch: Which is insane to me,

Jonathan Breeden: which is a whole nother podcast. But literally, if you cannot agree and you’re a joint owner because you’re already divorced, the one owner can [00:29:00] petition to partition with the clerk of court, and the clerk of court will order the house sold in the courthouse steps.

Raena Burch: They’ll literally auction your house.

They

Jonathan Breeden: will literally auction your house. They do it every day when I’m at the courthouse, or most days when I’m at the courthouse, and you are not gonna get. Nearly

Raena Burch: as much,

Jonathan Breeden: as much as you would get if you would just go list for a realtor and you may not get it. But the, the other thing is the buyer has to pay at least what the mortgage is.

Yep. And if you owe a lot and there’s not a lot of equity. Nobody will show up to buy your house. And then So then you’re stuck. Yeah. Because if nobody, if nobody pays off the mortgage, they don’t get the house. Yep. So, so you’re still stuck with the house, but we need do

Raena Burch: Yeah.

Jonathan Breeden: Right. You’re sort of stuck.

Exactly. But that’s another podcast for another day. So anyway, so Well cool. That’ll be this edition of The Best Of Johnston County Podcast. I could talk, Raena and I could talk about this for hours. We might do two or three more on this same subject over the next few weeks. So check back at least.

Listen in. Like I said, if this is your first time listing or, or watching this on YouTube, please like, follow, [00:30:00] subscribe. Give us a five star review so you’ll be made, made aware of future episodes of The Best Of Johnston County Podcast. This e, this podcast grows by you sharing and commenting on it. And recommend it to your friends, and we would greatly appreciate that we’re in this to promote Johnston County and all the things that are good about Johnston County.

If you have any questions about what you heard about houses and divorce, we do do family law here at the Breeden Law Office. Give us a call at (919) 661-4970. We’ll be glad to have you come in, sit down, talk to one of our many attorneys, and we’ll tell you what you can expect and what you can’t expect to happen with your house in a divorce.

Until next time, I’m your host, Jonathan Breeden.

That’s the end of today’s episode of Best of Johnston County, a show brought to you by the trusted team at Breeden Law Office. We thank you for joining us today and we look forward to sharing more interesting facets of this community next week. Every story, every viewpoint adds another thread to the rich tapestry of Johnston County.[00:31:00]

If the legal aspects highlighted raised some questions, help is just around the corner at www. breedenfirm. com.