When the house is worth less than the mortgage, or the lender forecloses, your Georgia divorce decree decides which of you absorbs the loss.
An Underwater House
An underwater house sells only if someone covers the shortfall or the lender accepts less in a short sale.
In Ziyad v. El-Amin, 293 Ga. 871 (2013), the husband had six months to refinance the house out of his former wife’s name or sell it and pay off its debts. He did neither, and the trial court held him in contempt. Finding that the house could sell only if the principal were paid down, it also ordered him to pay $12,000 a year toward it. The Georgia Supreme Court affirmed: the decree required him “to pay the principal down to the extent necessary to render the property salable.”
In Jett v. Jett, 291 Ga. 56 (2012), the agreement split the net sale proceeds equally. The house was worth $101,000 against $158,000 owed, and the husband failed to refinance it as required. The Supreme Court upheld his contempt but reversed the order making him alone liable for any shortfall, because the agreement never contemplated an unequal division for an underwater house. It also reversed an order to liquidate his other assets: a court may not later force a party to sell property awarded to him to satisfy another provision.
Foreclosure Does Not End the Obligation
In Fodor v. Fodor, 253 Ga. App. 248 (2002), the husband was to pay the mortgage as part of their property division. He stopped paying, and the house was foreclosed. Such a duty survives a sale, as our post on who pays the mortgage after a Georgia divorce explains, and the Court of Appeals held: “The same rule should apply equally in the case of a foreclosure.” She was entitled to the payments he would have made, including the interest the lenders would have collected, through continuing garnishment.
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This post is a quick overview of the law and is not intended as legal advice. Please feel free to contact our office for a consultation if you have questions about this or any other legal aspects regarding your case!