How to Sell a House During a Divorce in Pennsylvania and New Jersey

Who owns the house, and who has to sign?

Start with the deed. Everyone named on it signs the agreement of sale and the deed, so neither of you can sell a house you own together alone.

Married couples who buy together usually own the home as tenants by the entirety, a form of ownership only spouses can have. Pennsylvania's Superior Court describes it as property "held jointly by a married couple" and says neither spouse, acting alone, may sever it, for example by conveying part of it away. New Jersey's law creates it when spouses take title under a deed naming them as husband and wife, and says neither spouse may "sever, alienate, or otherwise affect their interest" during the marriage or upon separation without the written consent of both (N.J.S.A. 46:3-17.2 and 17.4).

What if only one name is on the deed?

The house can still be marital property. Pennsylvania counts "all property acquired by either party during the marriage," with exceptions such as property owned before the marriage or received by gift or inheritance from someone else (23 Pa.C.S. § 3501). New Jersey divides property acquired by either spouse during the marriage, but not gifts or inheritances from outside it (N.J.S.A. 2A:34-23). Two more protections:

• New Jersey: a married person is entitled to joint possession of the home the couple lives in as their main residence. A buyer from the other spouse takes it subject to that right unless it's released, ended by a court, or lost, for example by voluntarily abandoning the home (N.J.S.A. 3B:28-3).
• Pennsylvania: a court can issue an injunction to stop a spouse from selling or borrowing against property to defeat equitable distribution (23 Pa.C.S. § 3505).

One more Pennsylvania rule: if your spouse is your agent under a power of attorney, filing for divorce revokes that appointment unless the document says otherwise (20 Pa.C.S. § 5605). So an old power of attorney usually won't let one spouse sign for the other once the case is filed.

How do Pennsylvania and New Jersey courts divide a house?

Both states use equitable distribution: the judge divides marital property in the way the law considers fair, after weighing a list of factors. Neither law sets a fixed split, and nobody can tell you in advance what a judge will decide in your case.

Should you sell before or after the divorce is final?

It depends on your agreement, your mortgage and your taxes. Here's what the timing changes.

How long until it's final? In Pennsylvania, one spouse must have lived in the state for six months before filing, a mutual-consent divorce can't be granted until 90 days after the case starts, and a no-fault divorce without consent requires living separate and apart for at least a year (23 Pa.C.S. §§ 3104 and 3301). New Jersey requires 12 months of residence before filing; its no-fault grounds are irreconcilable differences lasting at least six months, or 18 months of living apart.

What can a judge order if you can't agree?

Both states give judges real power over the house. In Pennsylvania, the court can:

• decide who lives in the house while the case is pending (23 Pa.C.S. § 3502(c));
• block a sale or new loan meant to defeat equitable distribution (§ 3505);
• order an interim partial distribution of marital property, at either spouse's request (§ 3502(f));
• divide or assign the house, and order a transfer or sale if someone doesn't comply (§ 3502(a) and (e));
• after the divorce, order a former entireties house sold and the money split (§ 3507).

In New Jersey, neither spouse can force a partition of a house held by the entirety during the marriage, the Appellate Division has noted. The judge makes "such award or awards" as needed to divide property acquired during the marriage, weighing the factors above. Contested cases first go to an Early Settlement Panel, where experienced divorce attorneys review the case and suggest a settlement. If money issues remain, the court may order economic mediation, and the first two hours are free.

What happens to the mortgage?

The divorce doesn't change your deal with the lender. The Consumer Financial Protection Bureau (CFPB) says a creditor can still collect from anyone whose name is on the loan, and taking your name off the deed doesn't take it off the mortgage. You're generally responsible until the lender releases you or the loan is refinanced without your name. The CFPB also notes that a spouse keeping the house may be able to assume the loan instead of refinancing, if they meet the loan owner's standards.

Until the house is sold or refinanced, keep the payments current, because the lender can pursue either of you. Already behind? See stopping a sheriff sale in Philadelphia or foreclosure in New Jersey.

How is the money split at closing?

1. Find out what's owed. Get payoff figures for the mortgage and any home equity loan, and check for liens, unpaid taxes and city bills. Our guide to liens and back taxes explains how those get cleared.
2. Put the split in writing. A signed settlement agreement or a court order, with a copy to the title company or settlement agent.
3. Debts come first. At closing, the mortgage, liens and taxes are paid from the sale price.
4. The rest is paid out the way your agreement or order directs.
5. No agreement yet? The money can be held in escrow, for example by the title company or an attorney, until you sign one or the judge decides. In Pennsylvania, either spouse can ask the court for an interim partial distribution.

If a Pennsylvania court orders a former entireties house sold after the divorce, the money left after expenses is split equally. Liens against both of you come off the top, and a lien against one of you comes out of that person's share (23 Pa.C.S. § 3507).

What about taxes on the sale?

IRS Publication 523 has special rules for divorce:

• Transferring the home, or your share of it, to a spouse or ex-spouse as part of a divorce settlement generally means no gain or loss.
• The spouse who receives it generally takes over the old basis, so a later sale is measured from what you originally paid, plus improvements.
• If your spouse transferred the home to you, you can count the time they owned it, but you must meet the residence test yourself.
• If you're still an owner and your spouse or former spouse is allowed to live there under a divorce or separation instrument, their use counts as yours.
• On a joint return, only one spouse must meet the ownership test, but both must meet the residence test for the full $500,000.

Example: you bought together for $150,000 and sell for $350,000 after the divorce. That's a $200,000 gain (before improvements and selling costs), or $100,000 each, and if you each meet the tests, both shares fit under the $250,000 limit. A tax professional can confirm your numbers.

Where are divorce cases filed, and where can you get help?

• Pennsylvania help: PALawHelp.org, which the Philadelphia court's help center points to, has forms and plain-language brochures. The Philadelphia Bar Association's Lawyer Referral and Information Service is 215-238-6333.
• New Jersey help: Legal Services of New Jersey's hotline, 1-888-576-5529, is free for people who qualify financially.
• Mediation: a private mediator can help you work out the house together in either state, and New Jersey's court-ordered economic mediation includes two free hours.

What are your options for the house?

A straight answer on price: an as-is cash offer, ours included, is usually below what the house would bring fully repaired, because the buyer pays for the repairs, takes the risk and carries the house while it's fixed. What you save is the repair bill, the commission and months of showings and carrying costs. If listing would clearly leave you both with more, we'll say so. See how we calculate our offer and our guide to selling as-is.

How can Vivid help?

We're a local, family-owned real estate investment company at 2614 Amber St in Philadelphia, and we buy houses for cash, as-is, across Philadelphia, its Pennsylvania suburbs and South Jersey.

• One written cash offer, usually within 24 hours, that both owners can review with their own lawyers.
• As-is: no repairs and no cleaning.
• The owners pick the closing day.
• We pay all the closing costs, and there are no fees from us. What still comes out of the price is only what's already owed against the house, such as the mortgage, liens or unpaid taxes; the rest is paid out as your agreement or court order directs, or held in escrow.
• No pressure. If listing would net you more, we'll tell you.

Get my cash offer Text or call (267) 551-5554

Questions about selling during a divorce

This guide is general information, not legal or tax advice. For your situation, talk to a Pennsylvania or New Jersey attorney or tax professional.