How Assests are Split. 1 stays in the House

[MidlifeMama]

Can anyone tell me how assests are generally split in a divorce when one spouse keeps the house and the other moves out? My state is 50/50. Here is my question, if spouse stays and keeps the family home and does not have the cash to buy out the other spouse, how does that work? I thought about doing a monthly allotment he would pay me for say over a period of 6 years which would equal roughly half of what the house would sell for now. Then a stipulation that if he sells the house, he pays out my share, minus anything he would have already paid. I would have this drawn up with a lawyer.

I want to be fair, and the amount would be minimal each much. We would not have anything but 401K and the house to split. I would not ask for alimony and child support is not an issue as children are grown.

 

Just the house issue if he stays and I go.

How have others worked this out in a 50/50 state when one does not have the cash to "buy-out" the other?

[CautiouslyOptimistic]

Well, we did a quitclaim deed, but we had no equity in the home because we'd only owned it for a year. I guess you could do the same and just agree on an amount and have him pay you monthly like you said? Of course get this all in a signed agreement.

[mikeylo]

Firstly,are you working ?

 

Second , you need to have an extremely easy divorce to have things settled nicely. Remember, divorce is all about money and since your only asset is the house, he won't make it easy to lose it.

 

Speak to your lawyer.

 

A settlement is easy to draw but hard to enforce.

[PegNosePete]

Can anyone tell me how assests are generally split in a divorce when one spouse keeps the house and the other moves out? My state is 50/50.

Well, seems like you answered your own question there. If your state is truly 50/50 then assets are split 50/50.

 

You should SEE A LAWYER to get a better idea of how things work in your jurisdiction. Don't rely on advice from internet forums. Most lawyers do a free initial consultation, so why aren't you there already? It costs nothing, you lose nothing, but gain lots of valuable information!

[carhill]

If the 401K is his and had sufficient assets, he could borrow against it to pay you off.

 

Currently, what percentage of the home's present appraised value is the first mortgage? Are there any other liens against the house?

 

IMO, if accepting a payout deal over time, I'd move to lien the house to promote performance, same as a bank does. You're acting like a bank in this situation, accepting periodic payments over time. A bank liens the asset and charges interest.

 

I'd also, in advance of any negotiations, run the various scenarios by a tax advisor so you don't get any surprises later, especially if the numbers are running into 5 and 6 figures, or more.

 

Myself, I'd want the deal as clean as possible with no future contact. Leveraging the 401K for a cash payoff would be my choice if possible.

 

What I did in our D was bought my exW a house and we negotiated the rest out with no cash changing hands. That was over 7 years ago and it worked out great. I used equity in my historical residence to fund the deal and will pay that off completely when I sell the place in the near future. Clean for her, clean for me. Kept the MSA simple and legal fees low.

[Birdies]

I would recommend seeing a lawyer - they can answer this for you.

 

In our case, it was an amicable divorce. We split everything 50/50, didn't even hire lawyers, just filled out the paperwork and filed it ourselves. I took out a personal loan to buy him out of his portion of the equity in the house. Is that an option for you?

 

If you can't do that, you could either 1) work out a payment plan, 2) he keeps more of the house equity and you keep more of the savings / retirement, or 3) you sell the house and split the equity.

[carhill]

Couple more questions:

 

1. Are both spouses listed on the mortgage/deed of trust for the historical residence?

 

2. Has he enjoyed stable employment historically?

 

3. Would you consider him a good credit risk?

 

I'm asking because society has become increasing less responsible for their, er, responsibilities and commitments, in general, both at the corporate/business level and the personal level. People are more likely to walk away from responsibilities and dare anyone to do anything about it, since doing anything about it, generally, is very costly.

 

One tip, especially if the financial settlement involves him 'owing' you something, like these payments or a future payout or an asset, etc.... make sure the settlement has a clause where the parties agree to pay the legal fees of either party who is forced to take legal action to enforce the agreement if/when the other party abrogates it. A lawyer knows the right language to use. This clause helped out a female friend of mine greatly when her ex was still stiffing her after some five years post-divorce and she had to take him back to court to enforce the court orders.

 

Also, since you're working from an amicable basis, consider having a mediator process the negotiations and form up the settlement agreement. Mediators are generally lawyers and bill appropriately but are focused on amicable settlements. Of course you can use separate counsel if you so choose. We used a mediator through the family law division of the court and I must say I was impressed by the speed and thoroughness of getting the deal done, filed, and adjudicated. Something to look at if appropriate in your jurisdiction.

[elaine567]

Has he ever told you he would stay in the house if you ever split?

It may suit you to have a regular "income" from your husband, but he may not want to do that.

Many want a divorce to be done and dusted and final, they do not want to be paying off spouses for years and years and some do not want to be reminded of happier times by rattling around alone in the same house, either...

[MidlifeMama]

Good advise and points.

I work, he works, good credit on both parts.

I do believe he would keep the house.

I do agree he would not want to keep paying me and would want a clean break (good point Elaine)

I did not understand the ins and outs of a house in a divorce. Now I realize that a quit claim document would take me off the mortgage and give him ownership and then he would have to refinance to give me half of the "Equity" is my understanding, if this is what we agreed upon in the divorce, I am guessing. This would give him the ownership and responsibility of the house and me 1/2 of what is the equity?

Thanks for the input all

[carhill]

When you quit your claim to an asset and record that document, what it does is put on the record that you no longer are asserting ownership claim to the asset. You'll still be responsible for the mortgage unless and until the mortgage holder/servicer releases you from liability.

 

If your spouse can qualify for the current terms and amount of the mortgage, the holder/servicer may release you from liability. If he cannot, doubtful. They don't care about you or him, only getting their money.

 

Scary version: You quit claim your interest but are not released from the mortgage obligation and H walks away from the house and doesn't pay you as agreed. The mortgage holder forecloses on the house and comes after both you and him for damages. There was a lot of this kind of stuff after easy money ended in 07 or so and I ended up buying houses that the bank foreclosed on and rented them to tenants with otherwise good jobs/income who couldn't buy a home because they walked away from an upside down one and it ruined their credit. Most took 5-7 years before they could qualify for a mortgage again.

 

I'd suggest doing further research into your options and clarify the specifics before spending any money on anything. I'd include in that a free consult with a few divorce attorneys. One can glean a lot of good information without bleeding cash and get a plan formulated and then go on-record with stuff.

[d0nnivain]

The two people involved can work out almost any deal that they both agree to & the court will generally honor it.

 

 

If you can't agree & the court must decide for you, which is an expensive gamble, the court will force the sale of the house & split up the cash equity as soon as possible. Unless the parties agree to some other arrangement, any judicial decision will not include payments over time. N.B. A decision is different then the judge signing off on what you agreed to

[PegNosePete]

If your spouse can qualify for the current terms and amount of the mortgage, the holder/servicer may release you from liability

And, that is the rub. Many people think it's a simple matter to just remove one person from a mortgage. But in fact this process is just the same as if the remaining partner were to apply for a whole new mortgage, for the same amount, in their sole name. It may even have application fees and arrangement fees associated with it. Often you don't know if you'll be accepted for a mortgage until you apply, especially in these days of credit crunch. And since you can't apply for a mortgage until the divorce is finalised, it's kind of Catch-22. Many divorce settlements say the remaining partner should "make best efforts" to remove the leaving spouse from the mortgage. The reason for this is that they can't guarantee it will be possible.

 

My advice is that if there's doubt about whether he will be able to get the mortgage in his sole name, then you should push for a house sale rather than a transfer into his name.

[mikeylo]

And, that is the rub. Many people think it's a simple matter to just remove one person from a mortgage. But in fact this process is just the same as if the remaining partner were to apply for a whole new mortgage, for the same amount, in their sole name. It may even have application fees and arrangement fees associated with it. Often you don't know if you'll be accepted for a mortgage until you apply, especially in these days of credit crunch. And since you can't apply for a mortgage until the divorce is finalised, it's kind of Catch-22. Many divorce settlements say the remaining partner should "make best efforts" to remove the leaving spouse from the mortgage. The reason for this is that they can't guarantee it will be possible.

 

My advice is that if there's doubt about whether he will be able to get the mortgage in his sole name, then you should push for a house sale rather than a transfer into his name.

 

Also add the cancellation costs, transfer costs , registration costs. If it's in arrears, add the interest on original value.

[Just a Guy]

Hi Midlifemama, would you like to divorce after all this? All the legalese and financial implications seem so impersonal almost like one is dealing with a business and not a marriage. All of it makes for very sad reading.