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Sale of Assets During Divorce

House with "For Sale" Sign Out Front | Sale of Assets During Divorce

As an experienced New Jersey Divorce and Family Law Attorney I know that Divorce is not only emotionally difficult but financially difficult as well. If a couple decides to live apart during a divorce it may quickly become impossible to maintain payments on marital obligations including investment properties and the marital residence. I often have clients come to me during a divorce and ask whether they can sell certain assets or property “pendente lite” (during litigation). Of course, if both parties agree to sell an asset there is no issue. The questions is- what happens when one party does not agree and there is no money to make payments?

Historically, it was rare for a Judge in New Jersey to order the sale of marital assets during a divorce litigation. However, as times change so do laws. Families often struggle when they have two incomes supporting one household. During a divorce, finances are even tighter and as such, there have been more and more cases where a Judge allows an asset to be sold during the divorce litigation.

If you are in the middle of your divorce and do not have enough money to continue paying for marital obligations, you have the right to petition the Court to sell a marital asset so that there is money to meet ongoing day to day expenses or even attorney’s fees.

The Court was limited in the past with regards to ordering assets sold during the divorce. Many attorneys still believe that selling assets / property during a divorce is prohibited thus I do not often see applications for such relief. However, today there is both case law and Court rules that allow a Judge to order the sale of assets during a divorce.

R. 5:3-5(c), allows the judge “to sell, mortgage, or otherwise encumber or pledge assets to the extent the court deems necessary to permit both parties to fund the litigation….” This rule gives the Court the authority order the sale of marital property as it deems necessary.

Significantly, the Supreme Court of New Jersey put this gray area of law to rest in the case Randazzo v. Randazzo, 184 N.J. 101 (App. Div. 2005). This case is monumental because the Court did something it has never done before. For the first time the Court clearly stated that “…a trial court has the equitable power to order…a sale [of the marital residence] and, if the circumstances warrant, to order the proceeds be distributed to serve the best interests of the parties,” id. at 102. The Court further held that “…consistent with N.J.S.A. 2A:34-23 and R. 5-3-5, the trial court may exercise its discretion to order the sale of marital assets and the utilization of the proceeds in a manner as “the case shall render fit, reasonable and just…”

I have personally filed and won a very difficult motion to sell a marital property during the pendency of the divorce. The parties, we will call them Bob and Patty, were married for about 30 years when they decided to divorce. They owned a property in New Jersey and had a vacation home in Florida. They also had a significant amount of debt and were living in two separate homes when the divorce was filed. This made their monthly expenses much higher than during the marriage. Both the New Jersey home and Florida home had hefty mortgages. In addition, Bob was paying rent for an apartment. Bob wanted to sell the Florida home while Patty objected. I filed a motion with the Court and was able to prove the financial hardship of the Florida home and that there was no reasonable way of sustaining that expense given the parties’ incomes and other expenses. I showed that Bob did everything possible to try to take a home equity loan on the property to maintain payments but he was denied. There was simply no other alternative but to sell the home. The Judge recognized that Bob had done everything possible in order to save the Florida property but that the parties could not afford it. The case law was on Bob’s side and the Florida property was put on the market and sold during the divorce litigation. This allowed Bob the opportunity to meet his monthly expenses including litigation costs.

If you are in the process of a New Jersey Divorce and need help, please feel free to contact my office to schedule a free consultation so that I can help you navigate this difficult time in your life.

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