Issue of Outstanding Mortgages in Brault v. Kosmowski (2020)

Published on
November 3, 2022
Written by
Angel Murphy

Property division in a Maryland divorce presents a veritable avalanche of potential issues, and one recent case relates to marital homes with outstanding mortgages. When real property is owned free and clear, this state of affairs lends itself to distribution fairly easily but financed real property is more challenging. In this post, we will discuss the recent case of Brault v. Kosmowski (2020) and its handling of dividing up real property mortgages.

Facts of the Case

In this case, the spouses owned a piece of mortgaged real property which was classified as a “marital home” and subject to division. The order assigned the home to the wife during the divorce process. However, the divorce order required that the wife either obtain a refinance or remove the husband’s name from the loan within 12 months. The wife failed to procure a refinance by this 12-month deadline. And subsequently, the husband moved to compel the selling of the home. The court initially granted this motion, but the trustee encountered substantial hurdles in selling the property. For one thing, the trustee had to deal with considerable resistance from the wife as she protested the court determination.

Assignment of Homes with Mortgage Loans

As mentioned, mortgaged homes present additional complexity for courts in property division. In Maryland, courts have wide latitude when handling mortgaged homes. For instance, judges may decide to sell a mortgaged marital home and have the proceeds divided. Judges can also assign a mortgaged property to one spouse and then attach conditions, such as removing the other spouse, obtaining a refinance loan (as was the case in Brault), and so forth. This is perhaps the most crucial piece of information readers should take away when it comes to property mortgages: when left up to a Maryland judge, there is a plethora of possible outcomes for property division.

Whatever the determination, you should always be certain to comply with the terms of the court order. Otherwise, there could be negative consequences like those in the Brault case.

Difficulties with Mortgaged Property

If one spouse is required to obtain a refinance loan, readers should know that this situation can cause difficulties. In some cases, obtaining a refinance loan with acceptable terms can be challenging. This is particularly the case for homes that are “underwater” in value, meaning that negative equity is built up from the underlying secured loan. In cases involving negative equity, the homeowner may have to involve the court directly if a refinance loan is impossible or impossible to obtain.

Mortgaged properties also present some of the same challenges as unmortgaged properties. There may be disputes, for example, about valuation, and they may need multiple expert witnesses to resolve disagreements. Disputes can add costs to litigants, and they can also alter how judges ultimately determine outcomes.

Contact the Murphy Law Firm for More Information

If you’d like to learn more, reach out to The Murphy Law Firm today by calling 240-493-9116.

Angel Murphy

Personable. Passionate. Persistent.

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