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OT - Division of Assets and Liabilities

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  • OT - Division of Assets and Liabilities

    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.

  • #2
    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.
    .

    Sir John , Earl of Bligeport & Sudspumpwater. MBE [ Motor Bike Engineer ] Nottingham England.



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    • #3
      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.
      Last edited by A.K. Boomer; 10-11-2012, 10:12 AM.

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      • #4
        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."
        Last edited by justanengineer; 10-11-2012, 12:12 PM.
        "I am, and ever will be, a white-socks, pocket-protector, nerdy engineer -- born under the second law of thermodynamics, steeped in the steam tables, in love with free-body diagrams, transformed by Laplace, and propelled by compressible flow."

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        • #5
          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.

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          • #6
            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..

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            • #7
              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.
              .

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              • #8
                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.
                Last edited by ogre; 10-11-2012, 10:58 AM.

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                • #9
                  What happened to gold mine and shaft allocations?

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                  • #10
                    Originally posted by Mcgyver View Post
                    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
                    Peter - novice home machinist, modern motorcycle enthusiast.

                    Denford Viceroy 280 Synchro (11 x 24)
                    Herbert 0V adapted to R8 by 'Sir John'.
                    Monarch 10EE 1942

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                    • #11
                      Originally posted by Peter. View Post
                      McGyver must be a lawyer he's just multiplied the liabilities by a factor of 1000
                      naw, liabilites where always there.....I just maybe pointed some out. Wouldn't want to be a lawyer, they work too hard.
                      .

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                      • #12
                        Kill B!
                        How to become a millionaire: Start out with 10 million and take up machining as a hobby!

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                        • #13
                          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.

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                          • #14
                            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.

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                            • #15
                              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.

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