Failure to Make Mortgage Payments Decreases Equitable Distribution

Equitable distribution is how the parties' assets are divided in a divorce. Often one of the parties' largest assets is their marital residence. Frequently, a payor spouse or partner will be left with the alternative of paying the mortgage on the marital residence where the other party now resides or paying for their own residence when there are insufficient funds for both. When a party is ordered by the Court in a Pendente Lite Order, Final Judgment of divorce after a trial or agrees under the terms of a property settlement agreement to pay the mortgage on the marital residence and fails to do so, that party's share of the proceeds from the eventual sale of the marital home may be reduced equitably to permit the other spouse or partner to receive what they would have received had the payments been made. In the recent case of Debra Freeman v. William Freeman, Sr., the defendant was to buy the plaintiff's share of the residence or the residence was to be sold. William failed to buy out the plaintiff and also failed to make the mortgage payments due. Although Debra did not make an appropriate accounting of proceeds from the eventual sale of the residence and the court determined she was remiss for same. Although Debra's accounting indicated she walked out of the closing with approximately $12,000, the trial judge determined the parties should have received a combined $42, 422.34 in proceeds and ordered the plaintiff to pay William $21,211.17, representing one-half of the proceeds they should have received from the sale. Debra appealed and the NJ Appellate Court referred to the decision in F.G. v. MacDonell, 150 N.J. 550, 564 (1997) to support the finding that Debra, as the party responsible for the sale of the residence, was under a "duty to exercise reasonable skill and care" in the transaction. As a result of her breach of duty, William was entitled to an award remedying the situation as it pertained to him. However, the New Jersey Appellate Division also held that the Superior Court Judge should have considered the impact of the defendant's failure to make the mortgage payments as required. The Appellate Division remanded the matter to the NJ Superior Court to allow the trial judge to factor the defendant's failure to pay the mortgage into the award to him of $21,211.17 and reduce the award equitably. If you are considering or facing a divorce, it is imperative that you have an experienced family law attorney review your matter in order to ensure you are protected from unforeseen pitfalls which may result in the event of a change in the economy, a bitter former spouse or partner or other circumstances. For more information about divorce, dissolution, child support, alimony, equitable distribution, civil union or other family law matters in New Jersey visit HeatherDarlingLawyer.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.