Real estate transactions and timing of divorce


At separation I purchased a ‘second home’ for my wife to live in while we were separated. This was part of separation agreement and meant ensure our kids have a stable ‘home’ whether with her or me. Now as we approach the divorce filing stage I am buying her out of the old primary residence (I live there now) and she is buying me out of the second home. I am the mortgage holder of both houses, she’s only on the deeds. She is getting a first mortgage for her home so I am not financially obligated and I will buy her equity out of the first home. I am going to refi the primary home and give her cash from that transaction.

So here’s my question - I think it would be better to get the divorce first and stipulate (append) to our separation agreement the details of the real estate distribution ($ cash out, ownership). Then she gets her mortgage in her own name and as single. She’s currently putting married on the application but using only her own income (she qualifies). All other details of the distribution are set and really I only am cashing her out of the primary home to give her cash - we could do the split other ways but that would leave her with 1/2 my 401K but not much cash. What’s better in this case? Get the refinances done with as ‘Married’ then do the divorce when we can settle everything then or get the divorce with the legal stipulations regarding how the real estate is settled after refi?

BTW - I have enough assets she could put a lien on to fully cover the home equity (cash out) I will owe, but I don’t want to liquidate those assets due to tax reasons.

Basically, it’s been 15 months of separation and I need that phase to end…


Either option is fine, but you will want to make sure that you have a fully executed separation agreement in place prior to obtaining the absolute divorce. If the absolute divorce is granted then you are barred from asking the courts to equitably divide your property in the future should a problem arise in the execution of the separation agreement. You want to make sure that all of the marital property is distributed in a separation agreement or an equitable distribution court order prior to the absolute divorce being granted (or at least having an equitable distribution claim filed and pending prior to the absolute divorce being entered).

The details of the refinances and buyouts can be put in the separation agreement so that when this does happen, both parties will know what they are getting, what they need to do, etc. If the refinances happen prior to the absolute divorce, then you both may need to execute free trader agreements so that each of you can refinance without the other one needing to be added.

Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

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