Before a new law in October of last year, a Maryland divorce court could not transfer title to the marital home. In a divorce, the court could only order the parties to sell the marital home and divide the net proceeds equally.
The court usually appointed a trustee to hire a real estate agent and sell the house. If one party wanted to buy the other out, the could do it by agreement, but if there was no agreement the only choice was to sell to a third party or buy the house from the trustee after the divorce.
An amendment to Section 8-205 of the Family Law Article of the Maryland Code gives the court the power to transfer ownership of real property from one party to another in absolute divorce cases filed after October 1, 2006; provided certain conditions are met:
1. The real property must be marital property and jointly owned by the parties (to be marital it must have been acquired during the marriage and not acquired by inheritance or gift from a third party; acquisition of the property with pre-marital funds may also preclude finding that the property is marital); and
2. The real property must have been used as the principal residence of the parties when they lived together; and
If those conditions are met, then the court can transfer ownership from one spouse to the other if the mortgage lender consents and the spouse getting the house obtains a release from the mortgage lender for the other spouse.
Alternatively, the court can issue an order authorizing one spouse to buy out the other on specified terms and conditions.
The court can still order the sale of the property to a third party. And the new law does not apply to limited divorces. Maryland now joins Virginia and DC courts, which also have the power to transfer title to real property in a divorce.
Strategy tip: If you still have a divorce case pending that was filed before October 1, 2006, and want to take advantage of the new law, you may be able to dismiss your case and refile it now.