No equity in the house to divide?

Deal Score0

House has both husband and wife on title/deed.
Husband has mortgage solely in his name and credit.
Few months ago husband refinanced house.
House’s appraised value is the same dollar amount as the loan/mortgage amount.

Wife moved out of the house into an apartment of her own and filed for a divorce. (Wife doesn’t have income or creditworthiness to refinance or pay for house.) Wife only wants “her share” of equity out of the house.

Husband wants to remain living in home and continue to pay mortgage (but take wife off of deed at end of divorce). Husband doesn’t want to sell property due to a hefty pre-payoff/pre-payment penalty. (Isn’t wife responsible for half of the pre-payment/payoff penalty?)

What options are there for this?

How does one divide equity in a house that doesn’t “have” any?

Washington State
**How would one pay half the appraised value of the home and “buy out” the other if there is still a mortgage owing for the full appraised value? They’re married, so she legally owns half of everything, including the home AND THE DEBT right?

  1. Reply
    Ken C
    February 23, 2011 at 7:24 pm

    One calls a Lawyer in their own State as States are different…

  2. Reply
    February 23, 2011 at 7:51 pm

    He would pay her half the appraised value of the home and “buy her out.” They’re married, so she legally owns half of everything, including the home.

  3. Reply
    February 23, 2011 at 8:16 pm

    He had better get a good lawyer for divorce proceeedings. She could ask for half the value of the house (and everything else) no matter what her credit/financial situation is

  4. Reply
    February 23, 2011 at 8:59 pm

    You don’t.

    Your options are to:

    #1- Sell the house and devide the penalty.

    #2- Remain in the house, explain the situation to a judge and let the courts decide about her future ownership of the house.

    #3- Get back together.

    In any of these three options you have the potential for getting screwed. Best option is get the divorce finalized, thoroughly review the ruling with regard to the house, then make your decision based on the legal option afforded to you by the court system.

  5. Reply
    February 23, 2011 at 9:50 pm

    If there is no equity there is no equity, she can’t get whats not there. If he chooses to sell the house and there are fees greater than the amount sold for, she could wind up paying half for those fees. Maybe this woman doesn’t know that there is no equity or she doesn’t believe her husband when he says there is no equity. Or she could be talking to some uneducated people who are telling her she is entitled to it, but failed to mention that there has to be something to be there to get, and in that case she is not being a smart woman if she thinks otherwise. She needs to cut her loses or at least ask for something she can get.

  6. Reply
    February 23, 2011 at 10:44 pm

    Washington state is a community property state. Which means, in a divorce, each partner get 50% of “total assets”.

    This mean not just the house, everything, positive or negative. (My friends got a divorce and they were in debt up to $ 20,000 and each had to take $ 10,000 a piece of the debt! So be careful what you wish for!)

    This is how you do it.

    Cash Equivalent
    Get the Blue book value of the car.
    Get the total savings of each person.
    Count all of the jewelry (yes, her diamond too, whether or not she flushed it down the toilet.)
    Include furniture, clothing , etc. Count it all.
    Count the worth of the house.
    Count anything else of worth, both the husband’s and wife’s stuff.

    Debt Equivalent
    Count all of the credit card debt.
    Count all of the car loans
    Count all of other debt (her rent does not count, that is debt after the divorce)
    Count how much mortgage is on the house
    Count the real estate tax (for current year)

    Add all cash and subtract all debt.

    If it is a positive number divide by two and he owes her that amount. (Painful as it is, take a home equity loan out if possible).

    If it is a negative number, divide by two and she owes him that amount.

    Just because one person or the other has no job is of on relevance in a community property state. She can claim hardship and he can forgive that but get it in writing!

    Do not get a lawyer! Why? Both parties lose because whatever you get, guess what, the lawyers takes a huge bite out of both sides, so both people lose and the lawyers wins. Never use one lawyer for both sides. Whomever pays the lawyer wins 100% of the time! If you can’t agree, get an arbitrator. Warning! Whomever pays for the arbitrator is which side the arbitrator is going to most likely side on, so get someone totally impartial! Get two arbitrators, if that is the case. They charge a small fee, not percentage of gains! Read the small print. I mean it, read it before you sign!

  7. Reply
    February 23, 2011 at 11:06 pm

    If there’s no equity there’s no interest to buy. The wife does however have a contingent equity. If W is ever required to pay $ $ on the mortgage for which she is still liable she is entitled to an equity claim against the house to the extent of her payments. It will probably never happen; that’s why its just a contingency, but that’s why she shouldn’t quitclaim the house to husband until he refinances & she’s off the mortgage.

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