What Happens If You Divorce and Owe More Than Your Florida Home Is Worth?
Many of our short sale clients here at Reid Real Estate Group are in the process of a divorce or have already divorced but still own property together. Selling the family home may be a difficult and emotional event, made even more so when the home is worth less than what is owed on it and a short sale may be the best way to resolve the mortgage.
What Happens to the House During a Florida Divorce?
Ownership and payment responsibility for joint assets such as shared homes are addressed during divorce proceedings. However, a divorce decree has no bearing on the mortgage obligation. A divorce agreement assigning responsibility for the house to one spouse doesn't, by itself, necessarily release the other borrower from obligations to the mortgage lender. Only a refinance or payoff can remove a borrower from the mortgage. This fact is often overlooked during the divorce.
What If We Owe More Than Our Florida Home Is Worth?
If the home's mortgage balance and selling costs exceed the market value of the home, a traditional sale won't be possible without the parties bringing funds to closing to make up the shortfall.
What Are Our Options for an Underwater Home During Divorce?
The divorcing parties have a few options:
- One party may keep the home and continue payments. However, if both parties are on the mortgage, even a court order forcing a single borrower to make the payments does not remove anyone else from their payment obligation to the lender.
- The parties may produce the funds to pay the shortfall and sell the home traditionally.
- The parties can pursue a short sale to sell the home for less than their mortgage balance with the lenders approval.
Can We Do a Short Sale During a Florida Divorce?
Yes! In fact the best time to complete the short sale is prior to the end of the divorce proceedings. A short sale requires the cooperation of all borrowers, which is best accomplished before they part ways, while motivation to reach a mutually beneficial solution is high, and while a judge is still in a position to intervene if one party becomes uncooperative. Find out more about the short sale timeline.
Unfortunately, I've spoken with far too many divorcees long past the end of the divorce who wish to short sell, but cannot get their ex-spouse who is still on the mortgage to cooperate. This situation often ultimately results in foreclosure as all borrowers must cooperate in a short sale attempt.
Will a Quitclaim Deed Remove One Spouse from The Mortgage?
No! A quitclaim deed will transfer the ownership interest but does nothing to change the responsibility for the mortgage. This is by far the most misunderstood concept in the divorces I see. Even if one party quitclaims their interest in the property to the other, if both were on the loan, both will remain on the loan! Not even a court order ordering financial responsibility to one party will change this.
Any future defaults will affect both parties and their credit, and if a short sale comes into play both ex-spouses will need to co-operate to get the sale done. Also, if you are the one considering moving out and leaving the home to the other this financial responsibility may make it difficult for you to purchase another home. In some cases, you may never be able to buy until you have gotten out from under the existing mortgage.
Will you qualify for a short sale? Find out now!
Will a Loan Modification Remove One Spouse from The Mortgage?
No! A loan modification cannot remove one party from the mortgage. It can only change the payment terms, and just like a short sale or any other workout attempt, all borrowers must participate.
Do Both Spouses Have to Agree to a Short Sale?
Yes. If both spouses are on the mortgage, both must apply and be approved for the short sale together. This is why the ideal time to complete the short sale is before the divorce is over.
What If One Spouse Wants to Keep the House?
It is common for one spouse to keep the home and assume the payment obligation. However, if both parties are on the mortgage and it is not refinanced or paid off during the divorce, both parties will remain liable for making the mortgage payments.
What If Only One Spouse Is on the Mortgage?
If only one spouse is on the mortgage, only that party is responsible for the mortgage obligation. However, married couples frequently hold title together, and mortgage lenders often require the non-borrowing spouse to sign the mortgage documents, requiring both signatures to transfer any ownership interest.
What If One Spouse Refuses to Cooperate With the Sale?
A short sale cannot be completed without cooperation of all title holders and borrowers. Only a judge can force a party to cooperate in a real estate sale or face penalties if they do not.
When upside down in the home, the best time to address this is now, before the divorce is finalized.
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Absolutely seamless process from start to finish! Do NOT hesitate... simply call Minna! Our decision to short sell was heart-wrenching and daunting to consider. However, after initial contact with Minna, we felt reassured and confident that our judgment was sound. Both Minna's and her team's knowledge and experience in this area is clear: they are thorough experts. We can't imagine having a better experience. Thank you Minna Reid!
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Last Updated on September 29, 2026 by Minna Reid
