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Hupp31
10-11-2012, 08:27 AM
Hypothetically speaking...

A and B are married.

They buy a house together some years ago for $215K.

Housing market crashes. Current value of house is $150K.

Mortgage is $200K.

B decides she wants out of the relationship.

A wants to keep the house.

Given a 50/50 split of assets and liabilities (consider the house/mortgage to be the sole asset/liability), who owes who how much - and why - to dissolve the "partnership"?

The answer may or may not vary from state to state, I don't know. This is unchartered territory for me so an answer based only on the info given would be a good starting point.

Hypothetically speaking...

Thanks.

John Stevenson
10-11-2012, 08:48 AM
A keeps the house
B gets 50% of the assets = 75K and 50 % of liabilities 200K - 150K /2 = 25K
So in my book B gets 50K
A gets the house plus liabilities of 250K now.

A.K. Boomer
10-11-2012, 09:13 AM
here's my take on it,
im with SJ if both A and B were paying off the mortgage, but if B was just sitting around watching soaps and eating their own weight in bon-bons every week (that A bought) then I think B actually owes backpayments for rent,

what that would come to would have to be factored in on how often B flipped the switch on the plastic dyson and automatic dishwasher, but still - "B" should end up owing something, and not getting anything, that means not even free room and board...

edit - after reading Rangers post down below I think id side more with him as the house is no longer an asset - any way you slice this it's going to be a nightmare for both A and B if the judgment is a fair one,

hypothetically speaking of course.

justanengineer
10-11-2012, 09:16 AM
Depending upon how much of a B she is + how good of an actor....she gets the house and you have to pay the $200k. "She" already paid when you were mairred, just with your combined money, or at least thats what the judge told a good buddy of mine.

Edit: No offense, but looking at the numbers Id like to slug the banker that approves mortgages in which you pay $15k over several years on a $215k house. That is less than the minimum down payment on a house that costs half as much here, assuming great credit of course. No wonder we had this "housing crisis."

ranger302
10-11-2012, 09:17 AM
I see it a little different. At this point the house is not an asset, it has no equity. If A and B sold the house to C for 150, A and B have to come up with 50K just to pay the note off. So B gets 1/2 of the debt. In my opinon B owes A 25K to walk away.

DR
10-11-2012, 09:43 AM
As of now couple owes $200K on house.

House value $150K. Sell the house, after approx 10% selling fees, net $135k (provided a buyer can be found in that depressed market). Mortgage holder takes the $135K leaving A & B together owing $65K.

Depending how marriage/divorce laws work in their area, I assume each is responsible for the debts of the other taken on during marriage.

Since after years of marriage they have no assets, it seems like they're both screwed in a divorce. If they have salary/incomes to cover their debt burden things might workout, or....... bankruptcy..

Mcgyver
10-11-2012, 09:44 AM
whatever deal you reach with each other, just remember the mortgage will inevitably have joint and severable liablity. Regardless of how you split it betwee you, if ones a deadbeat the bank will come after the other for the full $50M....or if one hands the bank $25M for the their share of the liability, they are unlikely to be released by the mortgagee for the other 25M.

ogre
10-11-2012, 10:55 AM
This is a touchy area state to state and theres states that you can become rich if you catch B cheating by legally suing lover. All that aside,I think A should take off work early for a free consultation with a lawyer. I have seen so many people get so screwed over in divorce,that i would do my homework if i were you. It pays to be pro active in keeping yourself safe from these types of things. I am one that would start doing what you can to protect yourself even if B is playing nice right now cause it can change easily. My 2nd advice would b to try some new things in the relationship to keep it going. I feel some give up far too easily on a good thing.

Forrest Addy
10-11-2012, 12:36 PM
What happened to gold mine and shaft allocations?

Peter.
10-11-2012, 01:28 PM
whatever deal you reach with each other, just remember the mortgage will inevitably have joint and severable liablity. Regardless of how you split it betwee you, if ones a deadbeat the bank will come after the other for the full $50M....or if one hands the bank $25M for the their share of the liability, they are unlikely to be released by the mortgagee for the other 25M.

McGyver must be a lawyer he's just multiplied the liabilities by a factor of 1000 :D

Mcgyver
10-11-2012, 01:33 PM
McGyver must be a lawyer he's just multiplied the liabilities by a factor of 1000 :D

naw, liabilites where always there.....I just maybe pointed some out. Wouldn't want to be a lawyer, they work too hard.

Black Forest
10-11-2012, 01:54 PM
Kill B!

dave5605
10-11-2012, 02:48 PM
He says with sincerity.....the one with the sharpest lawyer gets the house. The other one gets the $200k debt.

If everyone were reasonable both A & B would share the debt equally. If I was the one being kicked to the curb I'd probably say the other can have the house and all it's applicable debt. I walk away clean/ free of debt. If you want to play hardball then my initial response applies and you get the debt and I get the house.

Another way might be that one of you figures out how to split the debt and house (doesn't necessarily have to be fair though) and the other decides who gets which part of the split.

I have actually seen partners in a business split it up this way. One determines the split (doesn't matter which one) and the other decides who buys/sells. It can really keep both parties honest.

CCWKen
10-11-2012, 04:02 PM
Keep in mind that banks will rarely, if ever, remove a name from the original loan nor will you get a release from a taxing authority. They have no obligation to do so and a court will rarely order it either. You may have to sell the house to yourself and that could get expensive with closing costs and re-qualification for a new loan. Talk to your bank and a GOOD attorney. This is not the time to go cheap. It's always a sticky mess with property that carries a lien in two names. You can't divorce the bank--They still own the property and the lien is collectible from all parties that signed the contract. Property taxes are the same way. If I were on the other side, I'd demand the house be sold and the loss split between parties. If you don't, it could come back to haunt you when you least expect it. If property values suddenly reverse, you could be liable for the other's lost capital for several years to come. It's better to sever all financial ties and move on.

Spoken from two big Ds with two Xs. :)

Abner
10-11-2012, 04:05 PM
I'm confused as to the replies. 1) A and B owe 50 k more than the house is worth. 2) B walks and pays A the sum of 25K plus 50% of fees. 3) B assumes the whole 200K mortgage.

michigan doug
10-11-2012, 04:09 PM
Hire a lawyer.

Some states are weird.

Some judges are weird.

Hire a lawyer, a good one.

Here's an example of why. Let's say the husband and wife decide that the wife keeps the house, and the husband signs the title over. He is no longer on the title and has no claim on the house. That's what a lot of divorce lawyers recommend.

But the husband's name is still on the mortgage. Typically, the divorce decree will openly state that the wife has to pay the mortgage payment herself now. That's nice, but it's just words on paper. What if she doesn't make the payment? YOU'RE STILL LIABLE, JOINTLY AND SEVERALLY, FOR THE WHOLE AMOUNT. She can ruin your credit (indirectly), she can get a lien put on your wages (indirectly) all because your name is still on the mortgage. It matters not at all that your name is no longer on the title.

In most states, you get half the assets that were acquired during the marriage, and you get half the debt/liability that was acquired during the marriage. So if she wants out, she has to pay half the amount that the house is "under water".

I am not a lawyer. This is not legal advise. Go hire a lawyer, a good one.

doug

oldtiffie
10-11-2012, 04:47 PM
I don't know how it is in the USA but a couple does not need to be married in this situation as it is sufficient thatthey have lived for a reasonable time ina "marriage-like relationship" as unmarried partners - and the partners need not necessarily be of thesame sex/gender 0 ie both can be either male or female.

cuemaker
10-11-2012, 06:02 PM
I didnt read all the replies, but here is some experienced knowledge for you..

As for who owes what to who.....you both are equally liable for the debt, 200K, and the house is NOT an asset, because there is more owed than it has value.

My experience comes from 17yrs in the wholesale mortgage world...

Chance of getting a name off the loan (without rewritting or re qualifying for the loan) , which will be required as part of any dissolution or divorce, is slim to none.

What you do have going for you is that you are willing to keep the debt (and hopefully its current) and work through the negative equity situation. This might spur the servicer/lien holder to work on a modification, if you qualify for the mortgage by yourself.

As for any advice, its only worth what you paid for it.

Retain a lawyer, talk to your mortgage servicer.

jkilroy
10-11-2012, 06:05 PM
Get "fired" and divorced fast, declare bankruptcy before she can, get the meanest lawyer in your area.

The Artful Bodger
10-11-2012, 06:54 PM
Stay together..

loose nut
10-11-2012, 07:02 PM
Hypothetically speaking...Your screwed.

The Artful Bodger
10-11-2012, 07:35 PM
A wants to keep the house on which is owed 200K.

B wants out but she owes 100K as her share of the mortgage.

B could pay 100K off the mortgage at which point she would 'own' half the house which A could buy off her for 75K.

Therefore B can buy her freedom with a mere 25K.

(Shared assets, house, = 150K, shared liabilities, mortgage=200K. Difference is 50K liability shared 50/50 is 25K liability for each).

lwalker
10-11-2012, 08:15 PM
Go see a lawyer because division of assets rules and guidelines vary by state. Any one worth his salt will give you at least one free half hour consultation. I've probably had a good two hours of free consults deciding between two divorce lawyers. (in the end, we were able to work out our issues and stay happily married)

Lyndon

sasquatch
10-11-2012, 08:45 PM
This is a topic i never dreamed would be posted here!!

However, i suppose with the amount of splits going on today this is very comman,,, BUT,,, what a hell of a position to be in!! Sad, Sad, Sad!

cuemaker
10-11-2012, 09:13 PM
Couple of issues with Mr. Bodgers solution,

1. B simply putting 100k into the mortgage debt does not solve a darn thing. The house loan will still have B's name on it unless A can refinance or modify the loan.

2. The answer as to how much the asset worth is a negotiable subject. Is the asset value determined after B's 100k, leaving just 25K( 150k value minus 100k payment, results in 50k equity, divided equally)? OR is the asset value determined based on the whole house value now that B has paid their fair share?

The answer will have to be hashed out together or with lawyers...There is not simple math answer as what is the value...And I am willing to take substantial odds A will only have the refinance option open to them, for which they will have to qualify for the loan (and may be a simple thing)

sasquatch
10-11-2012, 09:51 PM
Just my opinion, but whatever happens with this "deal" , it is going to be nothing but a huge "Money Pit"

For the LAWYERS!

(If A and B are 38-40 years old,, good luck at ever starting over again!!)

flylo
10-11-2012, 10:02 PM
B=Bear Bait!

john hobdeclipe
10-11-2012, 10:12 PM
Why do I get the feeling that this isn't all that "hypothetical?"

Get rid of the house, and the spouse, and somehow keep the machines.

Where's Torker? He can probably give some good advice.

cuemaker
10-11-2012, 11:00 PM
(If A and B are 38-40 years old,, good luck at ever starting over again!!)

Sasquatch... While not divorced, I started completely over at age 37 (Feb '07)..with a wife and 2 kids. I left the mortgage biz where I made between 85k-120k a year..to 9.50hr cleaning offices and sent the wife back to work. Once the mortgage business collapsed, I made a conscious decision to get and stay out. Went from a 2200sq ft house to a 950sq ft apartment.

Now I am roughly back where I was money wise (not even close to the high), I have a new house and live comfortably...

Also, I asked a very seasoned mortgage pro this scenario...the short answer, to the very original question...B has to pay 25k to walk. He doesnt like the answer, as any divorce will require B's name of any mortgage lien papers and for A to keep the house, they will need at least 25k of their own money, plus the 25k from B to attempt the refinance (100% loan to vale).



Lesson, you can ALWAYS start over.

oldtiffie
10-12-2012, 12:00 AM
I notice that in this scenario there is no mention of children or other property - ie cars, boats, HSM and garage tools (yep - them too - very much so).

No mention of any business you might own/run either singly or together etc.

The list just goes on and on.

Why do I get the gut feeling that the OP's post may not be hypothetical?

A good marriage counsellor and a very good "domestic/divorce/settlements? lawyer is a must.

No easy or cheap short cuts.

Further if "she" gets a court order (aka"garnishee") against your wages you will have a problem - the more so if a child maintenance orderis made against you.

http://en.wikipedia.org/wiki/Garnishee

camdigger
10-12-2012, 03:53 AM
I will repeat something I have heard occaisionally over the years.... A few dozen roses and a box of bon-bons once in a while are far less $ than divorce lawyer fees.

Tiffie was perfectly correct in saying that living together without saying the words in front of someone is NO protection in many places. I've been told the magic number in some Canadian jurisdictions is 6 months - ie if she's been living in the same house with you for 6 months and has spent more time at your house than at hers you are deemed to be married, and all rules for split-ups apply including division of accumulated increase or assets.

No comment on property division other than 1.) GET ADVICE FROM A LAWYER BEFORE ANY OTHER STEPS ARE TAKEN! 2.) Free advise from buddies is worth less than you paid for it - it can land you in a world of hurt if it is less than absolutely correct! 3.) in family and divorce law there are no absolutes, but sound advise from competent legal and financial counsel will greatly reduce the potential pain.

Having worked in an industry that requires extensive travel AND can be financially rewarding for 30 years, I have seen more relationship blowups than most. I've also heard some horror stories that are barely believable. I only believe them because I have heard snippets from both parties after the fact. Vindictive ex's on either side can make post event life miserable for decades infinitely more so if children are involved. truer words have never been spoken "Hell hath no fury..."

mike4
10-12-2012, 05:47 AM
Its better to put up with the one that you have got, than try to get another one, the next one could be worse!
Michael

Hupp31
10-12-2012, 08:02 AM
Many thanks to all that replied. For those that may be interested, here is some more "hypothetical" information.

Attempts are being made to make this a "no fault", 50/50 situation. Hopefully, no one will flinch. If lawyers can be kept out of the loop then the financial damage can be held to bad instead of devastating. Regardless, there will be no winners here. The only bright side is that there are no children involved.

Only time will tell.

Hypothetically speaking...

Rosco-P
10-12-2012, 08:06 AM
Attempts are being made to make this a "no fault", 50/50 situation. Hopefully, no one will flinch. If lawyers can be kept out of the loop then the financial damage can be held to bad instead of devastating.

It's never equitable. When you cease to be reasonable (in her eyes), a lawyer will be hired and he'll be all over you like flies on dog poo.

If you were smart, you started removing key items of significant financial or sentimental value that you broght into the marriage before this all started.

There must have been warning signs. Did you fail to heed them?

As the song lyrics say, "She got the Gold mine, I got the shaft."

Rustybolt
10-12-2012, 08:25 AM
I don't know how it is in the USA but a couple does not need to be married in this situation as it is sufficient thatthey have lived for a reasonable time ina "marriage-like relationship" as unmarried partners - and the partners need not necessarily be of thesame sex/gender 0 ie both can be either male or female.


Here in the US it depends on what state you live in. Here in Illinois there is no common law marriage no matter how long two people have lived together. In order to have legal standing the couple has to married.

Mcgyver
10-12-2012, 09:19 AM
I will repeat something I have heard occaisionally over the years.... A few dozen roses and a box of bon-bons once in a while are far less $ than divorce lawyer fees.
..."



cheaper to keep her as the song says.....


...but it is machining forum so we need some crusty sayings as well....



a buddy's favorite line...." you know why divorce is so expensive?.................because it's WORTH IT!!!!!"



then there's Grizzard Lewis's famous line on being asked if he'd marry again....."naw, I'm just going to find a woman I don't like and give her a house"

A.K. Boomer
10-12-2012, 11:06 AM
The only bright side is that there are no children involved.

Only time will tell.

Hypothetically speaking...


that is one huge bright side ------- it's tough enough but I cannot imagine the holy hell that many go through if they have kids involved,

there's always something to be grateful for and u hi the nail on the head... good luck to u and your hypothetical problem... :)

customcutter
10-12-2012, 07:31 PM
Love (marriage) is grand.

Divorce is 20 grand.

heard that 20 years ago, so gotta figure inflation.

Heard a "Puerto Rican" phrase a couple of weeks back. "A happy wife, is a happy life".

good luck,
Ken

PeteM
10-12-2012, 07:56 PM
Seems to me that the simplest path would be to agree on a process of selling the house that let's the husband be among the potential buyers. The 10% or more of costs involved will assure that the bank is happy (it may sell at a loss, but they got full market value), the wife is happy (the house sold for its full value), and the husband is happy (maybe the house is worth more to him than anyone else -- if not he just moves on). If you're right about the present value, when all is said and done the couple will share a debt equally.

It's also possible the wife, once the reality of a fair settlement along these lines is spelled out, would be delighted to have the husband fully assume the debt and own the house.

danlb
10-12-2012, 09:46 PM
Like many have said, marriage counseling is much cheaper than divorce.

My story; Our house had appreciated a whole $25K while we were married. The bulk of the money that went into the purchase of the house was mine from before we married. When we divorced, we agreed she would get 1/2 of what we would make as a profit if we sold. Fast forward 1 year. Housing market goes up. I get sued for her part of the increased value. The original settlement is set aside on the grounds that I'd blackmailed her into agreeing to it. The judge has no problems giving her ANOTHER $15K despite the fact that the house had not gone up that much.

The lesson; keep it as civil as possible, keep it as fair as possible and make sure that everything is properly documented, signed, witnessed and notarized.

Dan
P.S. I had to refi to pay the Ex off. When I sold the house, The Realtor made more money from the deal than I did. So did my Ex.

danlb
10-12-2012, 09:50 PM
Watch out about declaring a loss and defaulting on the loan. Under some circumstances the bank will "forgive" the debt and take the house. The IRS considers that as income, specifically a gift. You will owe taxes on that amount.

My friend did that. They were $200K underwater when he caught her cheating and they split the sheets. They now need to come up with 35% of $200,000 to pay their tax.

Dan

Rosco-P
10-13-2012, 07:22 AM
Get (even pay for) a consultation with a real lawyer, one that specializes in Matrimonial cases, preferably a female one. Your rights and the laws vary from state to state. Find out your rights and what you need to watch out for. Protect yourself.

If I was having heart surgery, I'd seek out an appropriate specialist for advice and treatment, I wouldn't look for subject matter experts on a machining BBS. The soon to be ex, her family, her friends, may be reading every board you belong to as well.

firbikrhd1
10-13-2012, 10:07 AM
1. "A" should get a lawyer!
2. Laws vary from State to State, Judges vary as well.
3. In every state the laws are stacked against the male and in favor of the female regardless of who worked and who didn't. Time in the marriage, the shorter the better, is your ally, one of the few.
4. Use great caution! If "B" is a total Bit _ h she can make your life miserable. A simple ACCUSATION of abuse will put you on the defensive whether you are guilty or not. Stay far away from her and have witnesses of where you were at all times until the proceedings are over, and even after.
5. If B is a decent person, honorable and you can't work your relationship out you will be better trying to work out the division of assets between you. Otherwise the lawyer will get 30 to 40%.

VicM
10-13-2012, 03:55 PM
When we divorced the money part was easy because we had kept three accounts: my money, her money, our money. She put up most of the down payment so I had to pay into the "our money" account till we were even-steven. My money was for my stupid hobbies and my activities and her money was for her things. If we bought a new fridge, a new car, a garden rake, it came from the "our money" account. We settled up every month. We never had any money problems including when we divorced because the financial relationship was based on transparency and bookkeeping. Too bad more folks don't try it (like our government).

A.K. Boomer
10-13-2012, 05:49 PM
Vic, I had that same kind of set up with a gal but then when the relationship started to go south she blamed part of it on us keeping things separate like that and said it was more like we were roomates than anything else,
I tried to explain ----- "honey - roomates don't do the kinds of things we do to each other" argument if not just for a laugh and nothing but dead air... uhhhhgggg - ya just can't win....

VicM
10-14-2012, 10:21 PM
A.K., About a year later at the post mortem she said the same darned thing: "I felt insecure because of the bookkeeping." Good thing for me I got both the dogs! And later I got my Dad's Atlas 10F!

The Artful Bodger
10-14-2012, 10:54 PM
We never had any of those problems. My employer gave the money to the bank, the bank gave it to my wife and she gave some to me and there were never any problems!

A.K. Boomer
10-14-2012, 11:24 PM
Good thing for me I got both the dogs!!

Ha - that makes two of us, and what a long strange trip it's been with my two mutts but I wouldn't trade it for the world...

PHiers
10-15-2012, 08:47 PM
That may not be a problem. Check out form 982 at irs.gov. It is for just a problem like this when your prinicipal residence is sold for less than the mortgage and the bank forgives the rest.
Some conditions apply.

Paul



Watch out about declaring a loss and defaulting on the loan. Under some circumstances the bank will "forgive" the debt and take the house. The IRS considers that as income, specifically a gift. You will owe taxes on that amount.

My friend did that. They were $200K underwater when he caught her cheating and they split the sheets. They now need to come up with 35% of $200,000 to pay their tax.

Dan