Who Pays the Mortgage, Repairs and Costs While the House Is Listed in a New Jersey Divorce?

Your settlement agreement or a court order decides who pays the mortgage, taxes, insurance, utilities and repairs while the house is listed, and until one exists, your attorneys should settle it in writing. The lender doesn't follow that agreement, though. It can collect from anyone named as a borrower, so a missed payment hurts both of you.

I'm Dennis Mark Interdonato, a REALTOR® and Master CDRE® with The Dennis Mark Group at Keller Williams Realty Ocean Living. "Who pays for everything while we're selling?" is one of the first questions I hear in a divorce sale, and one of the fastest ways for a sale to turn into a fight. Here's how the costs usually break down, and how to keep them from becoming one more argument.

Who pays the mortgage while the house is for sale?

Whoever your temporary order, written agreement or attorneys say. Living in the house doesn't automatically make it one spouse's bill, and moving out doesn't automatically end the other's. The lender is a separate question. The CFPB says a divorce decree or property settlement can assign a debt to one spouse, but a creditor can still collect from anyone whose name appears as a borrower on the loan (CFPB). If your name is on it, the payment is your problem too, whatever the paperwork between the two of you says.

What happens if one spouse stops paying?

Both borrowers feel it, because the lender can look to either of you. Missed payments also raise the payoff at closing, which comes out of the equity you're dividing. If a payment is in question, tell your attorney right away. For what a missed payment sets in motion, read what happens if you miss a mortgage payment.

What about taxes, insurance, utilities and upkeep?

They keep coming while the house is on the market, and who covers them usually depends on who lives there, any support arrangement and your agreement or order. Three to watch:

• Insurance. New Jersey's Department of Banking and Insurance lists losses while a house is vacant for the number of days in your policy among common homeowners exclusions (NJ DOBI). If both of you have moved out, call the insurer.
• Utilities. Heat, power and water stay on for showings, the inspection and the appraisal.
• Property taxes and town water and sewer. Kept current, then adjusted between you and the buyer at closing.

If one of you is staying in the house until it sells, read can I stay in the house until it sells?

Who pays for repairs?

Before listing, repairs follow the same rule: your agreement, an order or your attorneys. After the buyer's inspection, repairs are a negotiation with the buyer, and they aren't automatic.

I put the repair list, the quotes and the budget in writing, and both owners sign off before anyone picks up a tool. I got a guy for everything, and I'm not putting any profit on top of anything. Read fix it or sell as-is in a divorce sale.

Who pays the realtor and the closing costs?

In most sales, from the proceeds at closing, not out of either spouse's pocket up front. The commission is negotiated and agreed in the listing contract; New Jersey's rules don't allow a fixed or predetermined commission rate in a listing agreement (N.J.A.C. 11:5-6.2). The seller pays the realty transfer fee when the deed is recorded (NJ Division of Taxation). The full list is in what comes out of the proceeds at a divorce closing.

What if there's little or no equity?

Know it early. A value and a payoff figure tell you whether the sale covers everything. If it's tight, the choices include both of you contributing at closing or adjusting the plan with your attorneys. If the house would sell for less than what's owed, the lender has to agree to any sale below the payoff, so start with your loan servicer, a HUD-approved housing counselor (the CFPB says they're often available at little or no cost) and your attorneys (CFPB, find a counselor).

What if one spouse refuses to pay their share?

I don't enforce payment, and I don't take sides on it. I write down what was agreed and what happened, send the same note to both owners, and your attorneys or the court take it from there. A clean record makes that conversation shorter.

How do you keep money from becoming one more fight?

One written cost plan, signed before listing: every carrying cost, who pays it, and how it's credited at closing. Both owners get the same home value and the same net-proceeds estimate, and when a number changes, it changes for both of you.

Frequently Asked Questions

If I live in the house, do I pay everything?

Not automatically. It depends on your agreement or order. Ask your attorney, and get the answer in writing.

Do we pay the realtor out of pocket?

Usually not. The commission is agreed in the listing contract and normally paid from the proceeds at closing.

Do we have to make the repairs the buyer's inspector finds?

No. Repairs after inspection are negotiated with the buyer under the contract. A credit is often the cleaner answer for two owners.

What if my spouse stops paying the mortgage?

Call your attorney. The lender can still collect from both borrowers, whatever your agreement says.

This is general information, not legal, tax or lending advice. Your attorney, tax professional or lender has the final word on your own situation.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. He's a former New Jersey home builder and residential remodeler. See how he handles home sales during a divorce.

Keep reading

• The Divorce Guide
• Selling a divorce home with little equity
• Have a question this didn't answer? Send it to Dennis Mark.