What is an Owelty lien? Owelty liens are a type of deed that allows divorcing couples to divide the existing equity in the marital home. This action is commonly utilized in divorces to “buying out” the remaining spouses’ interest in a home.
The party giving up their interest in the home obtains a lien against the property through a divorce decree, called an Owelty lien. The Owelty lien must be filed at the courthouse in the county records. When the party retaining their interest in the house refinances or sells the home, the other party is paid the value of their Owelty lien. This solution allows one person to obtain the full interest in the home while removing the exiting spouse from the mortgage, while also providing the exiting spouse with cash.
Warning! Both parties need to plan and pre-qualify for a refinance if they wish to retain the property. Many times one spouse can not qualify for the mortgage on their own. Without proper planning BEFORE the divorce is filed the result could be devastating for both. Both spouse’s credit could be ruined because the retaining spouse can not refinance and the equity can not be divided without a sale. Contact Richard Woodward, your Certified Divorce Lending Specialist for your initial consultation.
Owelty Liens FAQ
An owelty lien is a tool to utilize when the equity of a home needs to be split. Here are some helpful answers to frequently asked questions (FAQs) regarding an owelty lien:
Join our Facebook group today.