Divorce Agreement Clauses Related to Real Property
When drafting a divorce agreement it is important to think about how the terms related to real property will affect the future ability of the owners to transfer or refinance the property. Mortgage underwriters require that a divorced party have the right to transfer or refinance the property stated in the divorce agreement. A party that has failed to include the proper language in the divorce agreement may not be able to refinance the mortgage in order to get the other party off the deed or not be allowed to transfer the property.
As related to real property (ie: house, condo, vacation home) a divorce agreement generally provides that one party may live in the house and/or accept responsibility for the mortgage. If a party accepts responsibility for the mortgage and agrees to indemnify the other party, then the agreement needs to contain language to allow the party responsible for the mortgage to be able to either sell the property or refinance the property. A failure to include these provisions will result in the parties having to modify the agreement (if allowable).
In review, to avoid future complications with real property transactions make sure any clause in the divorce agreement allows for the parties to:
- Refinance the Property; or
- Transfer the Property.