Selling a Maryland house after the divorce decree: use and possession orders, the trustee sale, and getting a former spouse off the deed and the loan

Most of the questions we get about divorce come before the decree, and our divorce page covers that stretch. This article is about the part that comes after. The judgment of absolute divorce is signed, the lawyers have sent their final bills, and the house is still there with two names on the deed and two names on the mortgage. A Maryland decree can do several different things with a house, and each one leaves a different piece of work for the former spouses to finish. Here is what the orders mean, what they do not do, and how the house finally gets sold when the two of you agree on very little.

What the decree actually says about the house

Read the judgment, not your memory of the hearing. In Maryland the court cannot simply transfer title of the house from one spouse to the other as part of dividing marital property. What it can do is grant one spouse use and possession for a period of time, order the house sold and the proceeds divided, award a monetary payment from one spouse to the other that is often secured against the house, or approve a separation agreement in which the two of you already decided who keeps it. Many decrees do more than one of these at once, with a use and possession period that ends on a fixed date and a sale ordered after it.

Use and possession orders and the three year clock

Section 8-208 of the Family Law Article lets the court give the parent who has custody of a minor child the right to live in the family home, and it can order that right to run for up to three years after the divorce. During that time the other spouse cannot sell the house, cannot force a partition, and may still be ordered to pay part of the mortgage, taxes and insurance. The order ends early if the occupying spouse remarries, and the court can shorten or change it on a motion. Nothing in the statute stops the two of you from agreeing to sell before the deadline, and sellers do that more often than people expect, usually because the occupying spouse cannot carry the house alone and the departing spouse is tired of paying for a place they do not live in.

When one spouse keeps the house

If the decree or your agreement awards the house to one of you, two documents still have to be produced. The first is a deed from the departing spouse to the staying spouse. Maryland exempts a deed between spouses or former spouses made under a divorce decree or a written separation agreement from state transfer tax and recordation tax, and the counties follow the state exemption, so the deed records for the clerk’s fee and little else. The second document is the one people forget. The mortgage note was signed by two borrowers, and no decree in any Maryland courthouse can remove a borrower from a loan with a bank that was not a party to the divorce. Until the staying spouse refinances in their own name or sells, the departing spouse is still liable on the note, the payment still shows on their credit, and a missed payment two years from now still lands on both reports. Decrees often give the staying spouse a deadline to refinance and order a sale if it does not happen.

When the decree orders a sale

A sale ordered by the court is still a sale by the owners unless the court takes it out of their hands. In the ordinary case both former spouses sign the listing agreement, both sign the contract, both sign the deed, and the title company splits the proceeds according to the decree, including any monetary award that was ordered paid from the house. The trouble starts when one person will not sign, will not agree to a price, or has moved out of state and stopped answering. Maryland gives the circuit court the power, under Section 8-202 of the Family Law Article, to order partition or a sale in lieu of partition of property the two of you own together, and the court does that by appointing a trustee. The trustee lists or auctions the house, signs the deed in place of both owners, reports the sale back to the court for ratification, takes a commission from the proceeds, and distributes what is left. It is also slow, usually several months from motion to ratified sale, and it costs the trustee’s fee plus another round of attorney time. We cover the same machinery from the sibling angle on our partition article.

Transfer tax, capital gains and the recorded deed

The deed between former spouses is tax exempt, but the eventual sale to a third party is not, and the timing of the divorce changes the federal gain math. A married couple filing jointly can exclude up to 500,000 dollars of gain on a home they both owned and lived in for two of the last five years. A single filer can exclude 250,000 dollars. If the house is awarded to one spouse and that spouse sells it years later, only the single exclusion applies, though the time the other spouse lived there under a use and possession order still counts toward the staying spouse’s ownership and use test. The transfer between spouses under the decree itself produces no taxable gain. On the Maryland side, the seller closing costs in our closing costs article apply to the third party sale the same way they would for any owner, and the proceeds split follows the decree.

Selling to a cash buyer when the two of you agree on nothing else

The one thing most former spouses still agree on is that they want the file closed. A cash sale does that faster than a listing because there is no showing schedule to coordinate between two households, no buyer financing to wait out, and no repair negotiation that one of you has to fund while the other objects. We buy houses after divorce decrees across Maryland, including houses still under a use and possession order with both owners’ written consent, houses with a refinance deadline that passed, and houses a court appointed trustee is handling. You send us the address and a copy of the pages of the decree that talk about the house. We look at the property in person or on video and send a written offer within a day with the math shown against a listing. A licensed Maryland title company handles settlement, reads the decree, pays any monetary award or lien ordered from the proceeds, and cuts separate checks to each of you so that nobody has to pass money through the other. Two to three weeks is typical once both signatures are in hand. We do not need either of you to clean out the other’s belongings, and we do not need the house repaired, which our as-is page explains.

A divorce decree settles who gets what. It does not file the deed, pay off the loan, or find the buyer. Read the order for the dates it set, get the spousal deed recorded if one of you is keeping the house, watch the refinance deadline if you are the one who left, and when the order calls for a sale, pick the path that ends the shared ownership soonest. For many couples that is a cash buyer and a title company that writes two checks.