By Matthew T. Hovey, Esquire
Most couples can agree to get a divorce, but few can agree on how to divide their property. As a result, equitable distribution in Pennsylvania can be very costly and require the assistance of an attorney and experts, such as real estate appraisers and forensic accountants. Many couples, therefore, either choose to not or cannot afford to utilize equitable distribution.
What happens to the marital property then? Who owns the property? Who can possess the property?
The answer is enunciated in 23 Pa.C.S. § 3507(a), but understanding the statute requires an understanding of the legal terms it employs. The two terms are “tenancy of entireties” and “tenancy in common.” When a husband and wife purchase/receive property, they own it as “tenants by the entireties.” Essentially, they own it jointly and there is an automatic transfer of the property from one spouse to other upon the death of one spouse. Prior to the conclusion of equitable distribution, the court can step in and divide this property between the spouses “equitably,” based on the factors in 23 Pa.C.S. § 3502. Once the divorce is concluded, however, the property converts to “tenancy in common,” and the ex-spouses own it as “tenants in common.” Tenants in common are more of partners. They own the property equally in separate shares. One tenant in common could sell his or her share or will it any one they want. The property will not automatically pass from one tenant in common to the other.
The conversion of the property can cause issues if either party wants to pursue their share of the property in court. At any time, either party could file for the sale of the property, so that the proceeds can be divided equally between the parties. This could be to the detriment of one party if in equitable distribution the could had the power to grant them 60% of the equity in the property, but now, because of the divorce and conversion, the court is capped at 50% of the equity.
This also creates the risk for unfair surprise and a lot of financial uncertainty. For example, if both spouses own a house, divorce without pursuing equitable distribution, and one spouse voluntarily moves out of the home, at any time that ex-spouse could file an action with the court to force the sale of the other ex-spouses home. The house will either be sold or the ex-spouse residing in the house will need to buy-out the other ex-spouse. These are only some of the negative consequences of not pursuing equitable distribution.
The best alternative to a nasty fight over property is to reach an agreement on how to divide the property between of you. If this occurs, it is strongly recommended that even you hire an attorney to prepare a property settlement agreement rather than simply divorcing without addressing your property issues. Failure to do so could be disastrous or cause issues with lenders. The property settlement agreement can properly avoid the surprise and financial uncertainty described above.
If you, a family member, or friend is considering pursuing a divorce without seeking equitable distribution of the property, please contact our office for a free initial consultation.