This entry was posted on Wednesday, July 11th, 2007 at 1:42 pm and is filed under Laws. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Site Search:
July 11, 2007
A surprisingly high percentage of marriages end in divorce, and married couples often find themselves forced to divide a home or some property which the owned as a couple. Such a divide can be difficult, as a couple which is already having difficulty speaking rationally with each other over much smaller matters. In Utah, (a non-community property state), assets are not divided 50/50, but rather they are recognized as being partially owned by each spouse, based on what he or she contributed to the marriage and possible fault for the divorce.
The selling price of the property can be a huge fight, as each person will have different opinions over whether to sell with an agent(and who’s friend will be that agent), or how much to sell for. More often than not, at least one of the parties will want to keep the home, and will do whatever they can to prevent it from being sold, thereby driving down the value even further should it actually be sold.
A quick fix to all the problems involving such a dispute would be for one of the parties to offer or agree to the other party being bought out. If all the complications can be explained (an explanation best done by a third party attorney), then most people can reasonably see the point in such a buy-out. Both parties should realize, that given taxes, real estate agent commissions, lawyer fees (for fighting over the equity), as well as split mortgage payments could easily negate $40,000-$60,000 of equity on a small home. Why waste such money needlessly?
Prior to making any such agreement, you should ensure that your agreement will be recognized by the courts. There is nothing worse than giving your spouse $15k in cash, only to find he or she still maintains a claim in your hard bought equity. This can generally be avoided by waiting until equalization is settled, and the divorce division has been finalized before giving any buy-out sum.
The problem which arises is, one of the spouses needs to be able to come by a large amount of money in order to buy-out the other’s share in the equity. Sadly, most people don’t have any real savings, and if they do, chances are the other spouse already wants half of them.
There are, however, methods of coming by large volumes of cash quickly. If you have managed to protect your credit through the divorce you can draw a second mortgage with a Home Equity Line of Credit (HELOC) to cover the sum, refinance your loan, or use several 0% balance transfer credit cards in order to generate the cash you need at a manageable interest rate.
Getting a roommate (or three!) can help cover the payments on the mortgage and possibly offset the payments on a loan if you borrow money to buy-out a spouse. If you’re truly creative, you can offer one of those roommates a partial ownership in the home with the option to buy them out when your credit improves.
Whatever course you take, just be sure and use an attorney! You want to be sure you own the home 100% before paying anyone!
read comments (3)
July 11th, 2007 at 3:13 pm
1)You assume that people are rational when they get divorced. Too often one wants to screw the other so badly that they end up screwing themselves.
2)True story of a coworker that got a nasty divorce. When the divorce was finalized the judge ordered that the assets be split 50:50. The house was appraised at $200k. He bought her with his side of the cash assets and investments. Five years go buy, the housing market skyrockets in his area and he sells his house for $320k. Two days later he is sued by his ex for ½ of the difference of 200k and 320k, or $60k. Although logic would say that it was obvious the market went up, she argued that the original appraisal was under priced. She won! He lost and as a result he was forced out of purchasing a new house with his new wife. Moral of the story: sell your house. Start over.
July 11th, 2007 at 4:07 pm
There is frequently a huge battle over the appraised value. (as well as one to stop it from being sold for anything different)
Agree on the rationality issue. There is a time and a place for attorneys to get involved…
July 12th, 2007 at 7:12 pm
Another true story: My mom’s friend husband cheated. Long messy divorce. She got to live in the house for as long as she wanted. However, when she sold it, he got half. After 12 years of running the house into the ground and letting 20 cats and 1 400lb pig pee all over it, she sold it for $200,000. The land alone was appraised at $350,000. This is in an area where houses go for $750k to $2.5m. He tried to stop the sale but the judge ruled in her favor.
I can’t imagine being so angry at someone that I’d give up that much money just to get revenge.