Mortgage and the Marital Home in a Washington State Divorce

Overview: The marital home and mortgage can raise complex financial questions in a Washington state divorce, from selling the marital home to deciding whether one spouse can keep it and how to handle mortgage liability.

Key Takeaways

• Selling the marital home during a Washington state divorce is uncommon and can add financial and logistical complications.
• Couples may sell the home after a Washington state divorce, with the division of proceeds determined as part of the overall marital estate.
• In some circumstances, spouses may delay the sale until a specific date or event, though this keeps them financially connected.
• One spouse may keep the home and buy out the other spouse’s share, but transferring the deed does not automatically remove someone from the mortgage.
• Both spouses can remain liable to the lender if their names remain on the mortgage, even after the divorce.

One of the most frequent questions in Washington state divorces concerns the disposition of the marital home. Specifically, people want to know what will happen to the home’s mortgage as they consider whether to pursue the home during the asset division stage of divorce.

Washington state courts prefer a clean financial break post-divorce, given the foreseeable risks of staying financially connected to an ex-spouse through a significant asset. Shared arrangements are therefore usually temporary. 

Even so, given the heightened emotions around the marital home, some individuals choose this route, leaving uncertainty about what will happen to the existing mortgage. There are several common ways to handle a mortgage, which we will discuss here.

But first, it’s important to understand your options for disposing of the family home in a Washington state divorce and how to analyze whether keeping the home, including the mortgage, is best for you financially.

What Happens if You Sell the Marital Home During the Divorce Process?

Selling the marital home during a divorce is the least optimal option for divorcing couples and is usually not done because the process is not simple. It requires the soon-to-be exes to agree while the case is pending on the terms of sale, how repairs will be handled, the choice of agent, and how the sale proceeds will be handled until the divorce is concluded.  

The parties also face the issue of finding replacement housing. They will not be able to purchase a new residence before the case concludes, as lenders do not want to deal with title uncertainties in a community property state when the owners are still legally married but in the middle of a divorce. Any rental obtained will involve funding for moving costs, which may not be available until the case concludes.  And if the rental housing is temporary, then after the divorce concludes, a duplicative moving expense will result.   

Washington state is one of nine community property states in the United States. That said, how community property is treated varies between the community property states. Under Washington state’s treatment, if the spouses purchased the house during the marriage (regardless of whose names are on the deed), the court will divide the interest “equitably” upon divorce. 

What Is Equitably vs. Equally in a Washington State Divorce?

Because the marital home can stir up strong feelings, selling it promptly can be mentally freeing. At the same time, people may want to avoid adding an extra layer of complexity to their divorce by taking on this project before it’s needed.

For example, in a Washington state divorce, “equitably” does not necessarily mean “equally.” In other words, “equitable” division might not mean dividing property 50/50. Thus, unless the mortgage on the home in a Washington state divorce is in distress with house payments in arrears or a foreclosure pending, decisions about the family home are usually held until the end of the case so they can be made in conjunction with decisions about division of the overall marital estate. 

For this reason, in the unusual circumstance where the parties’ home is sold during the divorce, the proceeds are usually placed in an interest-bearing account and held until the end of the case to be considered in the ultimate division of the marital estate.  

What Happens if You Sell the Marital Home Shortly After Divorce

A common option is for the couple to sell the family home after the divorce has concluded. This option has many advantages, including a predetermined (or court-ordered) agreement on the percentage each spouse is entitled to. 

The parties may decide to list the home immediately, or delay listing it until repairs are completed and/or until a particular time of year. Selling comes with its own set of challenges, particularly market fluctuations. The timing of your divorce won’t always align with the housing market, so the parties and the court must consider these factors when making decisions. Depending on the real estate market and other factors, such as the time of year, the house may not sell quickly or for the price you want. 

Whether you sell the home during the divorce or afterward, keep in mind you may also face capital gains taxes if the value has increased significantly since you purchased it. This expense is also a community obligation that must be factored into an equitable division of the marital estate, and another reason to defer sale until a full division is determined. 

What Happens if One Spouse is Awarded the House, and the Other Spouse is Removed from the Deed and Mortgage?

Another common option is for one spouse to be awarded the home and the other spouse to be cashed out for their share using other assets in the marital estate. This is sometimes called a buyout. The person giving up their interest in the home will then be removed from the deed, but may or may not remain on the mortgage, given the arrangement you negotiate or what the court orders. 

If this scenario is selected, it is important to understand that ownership (title) of a home is separate from indebtedness (such as a mortgage or secured lines of credit) on it. Just because ownership (title) of the house goes into one spouse’s name does not mean that the mortgage automatically gets transferred to that sole spouse’s name as well. 

Even if the title is quitclaimed to one spouse by the other, the lender can still collect the mortgage from anyone on the loan, whether they own the asset any longer or not. The parties cannot agree, nor does the divorce court have the legal authority to order, that a third-party lender cannot exercise their collection rights against one of the parties to the mortgage. 

For this reason, whether you are the spouse keeping the house or the spouse giving it up, it is best to consult an experienced Washington state family law attorney to determine which of these options would be right for you. Depending on whether you are the spouse keeping the home or the spouse giving it up, there are different risks and considerations associated with the decision beyond just the question of whether the house can be refinanced by the spouse keeping it.

What Happens if You Delay Selling the Home Until a Specified Event or Date?

In rare circumstances, the court can order, or the parties may agree, to continue owning the home together until a certain event or date, subject to a predetermined agreement on how the net sale proceeds will be divided when the home is eventually sold. Under Washington state law, after the divorce, they are considered to hold the property as “tenants in common.” 

Because Washington state courts prefer to provide the parties with a definitive, clean break going forward, such an arrangement is unlikely absent unusual circumstances. One scenario could occur if the parties had children in high school and wanted to allow the children to finish the remaining years in their established school until graduation. 

When the parties agree to or a court orders such an arrangement, it commonly requires the spouse remaining in the home to pay their own living expenses, including the mortgage payment, real estate taxes, homeowners’ insurance, and utilities.

Under the right circumstances, delaying the sale might be a great solution for a family’s unique circumstances. However, it carries risk because, in the short term, the parties remain financially tied together.

More specifically, this option can be risky if the party remaining in possession of the home and responsible for expenses cannot diligently keep the payments current or maintain the premises in good condition. Because both names are on the mortgage, both remain legally liable to the lender. If the other party is living in the home and fails for any reason to fall behind on payments, your credit and financial stability will likely be affected. So, the decision to select this option should be made carefully.

Sort Out the Marital Home and Mortgage With a Seattle Family Lawyer

Numbers don’t lie. So grab your calculator and begin an objective, emotion-free analysis. If a financial analysis feels overwhelming, consult a Washington state divorce lawyer who can help you model different scenarios.

At Elise Buie Family Law, our team of Seattle family law attorneys can guide you through the analysis of disposing of or keeping your marital home and help you make informed decisions that fit your financial and emotional needs, today and in the years to come. Contact us today or schedule a convenient time to speak. 

Frequently Asked Questions

What happens to the mortgage during a Washington state divorce?

The mortgage remains unless it is paid off, refinanced, or changed with the lender.

Can one spouse keep the marital home?

Yes. One spouse may keep the home and buy out the other spouse’s interest.

Does transferring the deed remove a spouse from the mortgage?

No. A deed transfer does not remove someone from mortgage liability.

Can spouses continue owning the home together after divorce?

Yes, in some circumstances, though this keeps both spouses financially connected.

Who pays the mortgage in a Washington state divorce if one spouse stays in the home?

The divorce agreement or court order can assign responsibility for the payments, but the lender can still pursue anyone named on the mortgage.

Can a divorce court remove someone from a mortgage?

No. A divorce court cannot order a third-party lender to release someone from its loan.

Does the spouse keeping the house have to refinance the mortgage in a Washington state divorce?

Not necessarily. Refinancing depends on the loan, lender, and divorce terms. A court can assign mortgage responsibility but generally cannot change the lender’s loan agreement.

Should you consult an attorney before deciding what to do with the home?

Yes. The financial and legal consequences can vary depending on the mortgage, home equity, other marital assets, and each spouse’s circumstances.