When you and your spouse decide to get a divorce, there are several factors you need to consider, including property division. In California, marital property is referred to as community property. These are assets that the couple buys during the marriage, and are considered owned by both parties. During a divorce, both parties or a judge — depending on the circumstances — will determine who gets what when dividing marital property. With marital property on the line, there are certain steps that you must take in order to protect your rights. Sometimes, this includes putting a lien on marital property.
In some cases, one spouse wants to keep the marital home or the car. However, the other party may often worry about losing the equity that they helped to build their home. This doesn’t necessarily have to be true, though; there are options. At Chung & Ignacio, our Rancho Cucamonga divorce attorneys understand how liens on marital property work and what they can do to protect your assets. If you feel like you are going to lose equity in the marital home, you should understand your options and what can be done to help you. Read below to learn more about liens on marital property.
What is a Divorce Lien?
If your spouse is awarded the home in which you both lived, you may be able to seek a lien from the court that would help protect the equity to which you are entitled. This serves as a “title encumbrance” against a specific real estate asset. The lien makes it so if your spouse decides to later sell the real estate, part of the amount the home sold for must be used to pay off the lien. If the spouse who is try to sale the home does not pay off the lien, they may be unable to sale the home and it will show that the home does not have a clear title.
Payments on the Lien
Before the situation continues, you and your spouse may discuss how to pay the divorce lien. A promissory note can be used to outline the details of the arrangement, how much you are owed, if there is any interest to pay, and how much compounded interest there will be. You can have your spouse put the home up for sale in the future or pay the lien off completely. If done in installments, you may even be able to request that interest be paid as a result.
Selling Off the Lien
In some situations, the spouse who has the lien on the home may opt to sell the lien. This means that a third party buyer will be able to pay cash for the lien, and would then become the new holder. At the time the spouse sells the home and has to pay off the lien, the new lien holder will be the one paid. A spouse may not be able to sell his or her lien if the agreement does not allow for it and is subject to other conditions such as timely child support.
Liens are not for everyone. In order to qualify for a lien in the first place, you and your ex-spouse must have built equity in the home. In instances when the lien holder wants immediate payment, the spouse who was awarded the home may be able to refinance the mortgage. Refinancing means the lien holder gets an immediate cash payment and the name is no longer on the mortgage loan. To learn more, contact our Rancho Cucamonga divorce attorneys at Chung & Ignacio.