What Happens to Jointly Titled Marital Maryland Real Property in a Divorce?

In Maryland

Ideally, parties in a divorce proceeding work cooperatively to determine and divide their marital real property and reduce the terms to what will become a portion of a written marital settlement agreement. By proceeding in this fashion, the parties can agree on who has title to the real property owned, who will retain the title to real property, and then work to effectuate the transfer or retention of the same.  Even if one party has already formally instituted divorce proceedings in a Maryland court, it is important to remember that the possibility of reaching an agreement is always available and can often be the best vehicle for a quicker and more affordable way to a final divorce.

If an amicable resolution is not a possibility, then the parties will leave the fate of their real property to a Maryland court.  If a piece of real property is both marital and titled jointly a court can order use and possession (depending on custody of minor children), order the property to be sold or pursuant to the Maryland Annotated Code, Family Law § 8-205:

(a)       (1)  Subject to the provisions of subsection (b) of this section, after the court determines which property is marital property, and the value of marital property, the court may transfer ownership of an interest in property described in paragraph (2) of this subsection, grant a monetary award, or both, as an adjustment of equities and rights of the parties concerning marital property, whether or not alimony is awarded.

(2)  The court may transfer ownership of an interest in:

(iii)      subject to the terms of any lien, real property jointly owned by the parties and used as the principal residence of the parties when they lived together, by:

(1)       ordering the transfer of ownership of the real property or any interest of one of the parties in the real property to the other party if the party whom the real property is transferred obtains the release of the other party from any lien against the real property;

(2)       authorizing one party to purchase the interest of the other party in the real property, in accordance with the terms and conditions ordered by the court; or

(3)       both.

A Maryland court will determine the value of the jointly owned real property at issue based on evidence presented by each party at trial.  If use and possession is not an issue and a buy-out and refinance of the property is not an option then a Maryland court will order the sale of the jointly owned real property with net proceeds to be divided between the parties.  Notably, parties to a divorce where minor children are involved should be aware of a Maryland court’s power to award use and possession of real property to one of the parties for a period of up to three (3) years. Use and Possession blog.

Maryland Real Property Concerns When Divorce Occurs Outside of Maryland

Generally and subject to use and possession agreements and Orders, Maryland jointly held marital real property is sold or divided during the pendency of the divorce proceedings unless an agreement is reached otherwise.  This practice, however, is not uniform from state to state.  By way of example, it is possible that you obtain a final divorce decree from another state before your Maryland jointly owned real property is properly sold or divided.  In that instance, by operation of Maryland law, that real property that was held as tenants by the entirety will be converted into real property held by tenants in common[1].  It is essential to understand that a fundamental characteristic of a tenancy by the entirety—the automatic right of survivorship—is absent in a tenancy in common.  In other words, in the event of death, the deceased party’s interest will pass according to the deceased’s Last Will and Testament or the laws of intestate succession, instead of automatically passing to the other party.  Another state granting a divorce before jointly held Maryland real property is properly disposed of, can drastically and fundamentally alter your rights in your Maryland real property.  If you are seeking a divorce in a state other than Maryland but own real property in Maryland, it is important that you consult with a licensed Maryland attorney to understand how your rights in that real property may be impacted.

[1] “Given the valid dissolution of the marriage, Maryland law itself decides what happens to Maryland property, in the light of the facts which are that the former tenants by the entireties are no longer husband and wife. As a result, the parties became tenants in common, not by [out-of-state divorce] decree, but by Maryland law operating on their changed status[.]” Millar v. Millar, 200 Md. 14, 21, 87 A.2d 838, 841 (1952).

Disclaimer: This blog is informative in nature. The information contained herein is not to be considered legal advice and there is not an attorney-client relationship formed between Silverman Thompson and the reader.