This guest blog post was written by Lisa A. Copland Gordon, a lawyer in Chicago.
When you apply for a home loan, a bank’s primary concern is whether you can and will pay your mortgage. The actual home is collateral for the loan. If you do not make your payments, the bank can take the home back from you through a foreclosure. The bank would prefer that you pay.
Married people who get mortgages are not always both named on the mortgage loan. If one person in the marriage has poor credit, they may not qualify for a home loan. The other spouse must decide whether to get the loan in his or her individual name. A second decision to be made is whether both people will be on the deed or title of the home even if only one person is on the mortgage.
Unmarried couples or two friends seeking to buy a home together face the same concerns. Assuming both people can qualify for the loan, should they still buy a home with someone who is not their spouse?
When married couples divorce, the home or homes purchased during the marriage must be divided or distributed. The divorce proceeding results in a judgment in which the issues of the home and the home loan are addressed.
For example, the home might be sold, and the money split between the two ex-spouses. If both parties are on the loan, the party who will keep the home can refinance the loan to remove the other person’s name from the loan. If one of the parties does not follow the judgment, the other can ask the divorce court to force the other party to follow the terms of the judgment.
If an unmarried couple or two friends purchase a home together and then decide they want to go their separate ways, their options are like those of a married couple. They can either sell and split the proceeds, or refinance one person’s name off the loan. If they can’t agree, one party can file a legal document called a Petition for Partition. The petition must be filed in the county where the property is located and name all owners of the property. The only situation where this solution does not apply is if the property is in a land trust.
Once all owners have been served with the petition, the court will appoint a commissioner. The commissioner is someone who will act on behalf of the court to find the best way to equally divide the property.
If it is land, like farmland, the division is straight-forward. If the property is a single-family home or a condominium, the division is more difficult. Here is how the process works:
- The commissioner will get the home appraised.
- The home will then be sold by the Sheriff at public auction with the starting bid being two-thirds the appraised value.
- The proceeds received, if any, are divided equitably among the owners. Equitable is not equal, but fair. The court will give more of the proceeds to an owner who, for example, paid more than the other owners to keep up the home. The court will also give less to the owner who lived in the home but did not pay rent to the other owners. The court will do its best to make sure that the parties benefit equally.
This information is posted as a public service by Illinois Legal Aid Online and its partners. Its purpose is to inform people of their legal rights and obligations. Talk to a lawyer if you have questions about how this information applies to you.