Dividing the Colorado Marital Residence

Summary:  The marital residence generally must be sold or refinanced. The spouse who does not keep the home must have his or her name removed from the existing mortgage. Make sure that the spouse who leaves the residence does not remain liable on the mortgage.

What To Do With the Marital Home

The division of property in a Colorado divorce includes the disposition of the family home. In other words, if the home is marital property, then generally half of the equity belongs to each Spouse (but not always.)

If one of the spouses keeps the home, then:

1. The other spouse must be paid for his or her portion of the equity;

2. The other spouse's name must be removed from the title; and

3. The other spouse's name must be removed from the existing mortgage loan. Otherwise, that spouse remains liable for the payment of the existing mortgage, even though he or she no longer owns any portion of the home. In addition to potential credit report problems if the mortgage payments are late, that Spouse probably cannot qualify to buy their own property (unless he or she can qualify for both mortgages at the same time.)

As a result, generally the home must be refinanced if one of the spouses keeps the house.

The purpose of the refinance is to: (1) release the other spouse from the existing mortgage loan; and (2) take some cash out to pay the other spouse for half as part of the divorce settlement.

The final court orders (or separation agreement) should provide that the spouse who keeps the home has a certain number of days (such as 60 days) to refinance the home. If the home cannot be refinanced within that time period, then the final court orders should require that it be sold.

If neither spouse can keep the home, then it must be sold and the proceeds split in accordance with final orders.