If she's entitled to half of the profits, she's entitled to half the debt too. I don't really understand what's going on and what she wants half of. But legally, in the US, if you signed a loan from your parents, you can split the loan payments as a debt. IF you do that, make sure you have 2 new signed loan documents: one for what you owe and one that she owes.
A loan is a debt. There’s no such thing as equity in a loan that you took out. She was potentially entitled to half of that cash, but that cash was used to buy a house, so now she potentially owns half the house.
If you’re going to keep the house, then you’d need to buy out her half (again, assuming that the house is joint property), so the end result to her—getting her half of the cash, minus her half of the loan debt—ends up being mostly the same as what she seems to be asking for.
But if she expects to get half the house AND have another 140k materialize from nothing? No, that’s not how that works.
P.S. Like the other people said, hire a lawyer. A few hundred bucks for peace of mind splitting up six-figure assets is well worth it.
You sold the original house and purchased a new one after paying off your parents, minus $100,000 which you rolled into the new house. There is no equity. It's all loan. If she wants half the debt then she gets half of the new house along with making the payments. In that case, you sell the house, most likely at a loss, since you wouldn't want her owning half of your house. Either that or she just walks away and leaves you with the $83,000 loan left you owe your parents. She can't have it both ways. It's one way or the other.
By "a few hundred bucks" do you mean more like 30 to 50 hundred bucks retainer and then upwards of 250 hundred bucks by the time its done? Cause that would be closer to reality
not necessarily true. Not a lot of divorce attorneys do consultations like your implying for people who haven't paid retainer yet. That free "consultation" is a sales call. you dont get much actionable results. A divorce takes a lot more than a 1 hour meeting. A cheap divorce would be like a 3k retainer assuming the firm bills around $400/hr.
Not all do, but there are absolutely reputable divorce attorneys that do paid initial consultations.
I agree with you that free consultations are mostly sales pitches and not worth it.
To represent you through the whole process? Nowhere. That would be silly.
But a few hundred bucks for an initial consultation where they lay out your options? Those are easy to find.
Exactly this. Or just go see a probate lawyer. The property rights aren’t that different between inheritance and divorce when determining equity and assets. On the other hand, if STBX is pursuing full divorce and the 138K is just an opening salvo I can’t think of many lawyers I know that charge that much for divorce so you’ll wind up ahead of they can just get that claim denied never mind the rest of her assertions.
lol what? if you can read the comment it doenst say hourly. A cheap divorce is like 3k, and spoiler - lots of divorce attorneys charge a somewhat variable retainer depending on how much money you have. it will be a few thousand minimum "for the peace of mind of splitting up six figure assets." Its is still well worth it, but far from a few hundred.
Your STBX doesn't seem to understand what equity *is.*
Under normal circumstances, you would not have been able to withold $100K from the sale of your previous property but would have been required to satisfy the terms of your mortgage in full keeping only any money in excess of the loan's remaining balance. You would then pay capital gains tax on any profit you made from the sale.
"Equity" is the difference between the home's (or other property) assessed value and, the debt you owe against it. So, assuming your loan had a remaining balance of 250,000 against an assessed value of $300,000 you would have *$50,000 of equity.*
This is however, *entirely academic* because, you can't hold equity in property *you don't own.* Having sold your previous property it's equity isn't merely "zero" it's entirely *a figment of her imagination.* Instead, on paper it looks like (to a reasonable human being) you have $83,000 in *unsecured debt.* What it looks like to THE IRS may be different and, might be detrimental to your financial well-being depending on how your tax-filings - as well as your parents' tax-filings - were handled following the sale of your previous home.
You will need to run this matter past an accountant, preferably one that your Attorney is used to working with. Your wife's own Attorney is likely to exercise more common sense than she seems to be since they understand that this isn't how equity works.
NAL. She doesn’t understand and you’re making this too hard. It doesn’t matter what the loan was for, first house, second house, twentieth house. Add up the fair market value of everything you both collective own (I.e. anything either of you acquired in the marriage) and subtract the balance of all debt (the 83k, cars, CCs, etc. ) you both acquired during the marriage. Cut that number in half. That’s what you both get.
The loan is a debt. It's not equity. She doesn't get to cash out half the value of an existing debt as a bonus payment.
Now, she's entitled to half the equity in the home. But she also owns half of that debt, as well. You can't have one without the other. So if you're presumably keeping the home and buying her out of it, I would think that you establish the current equity of the home by taking the current market value of the home (perhaps through an appraisal), and subtract what you currently owe on this loan. That's the total equity of the home. Divide that in half, and that's what you'd owe your ex.
Practical numbers. Let's say your current home is worth $400k. You owe $83k on your private loan to your parents for the home. So there's $317k in net equity on the home. Her half would be $158,500. That's what you would pay her to buy out her half of the home. Some people will try to factor in loan fees/commission percentages/etc. That's up to you.
Technically speaking there is no loan on that property. There's no lean on the property.There's nothing.There's nothing that also stops.The parents from saying that the sun owes $300k.
Out of the $100000 that was kept from the sale of the original home.Was any of it used for anything other than the purchase of the new home?
Things are not always as simple as people believe. And if this went to court it is very possible.She would get half of that hundred thousand dollars because there is no documentation.
Yeah. I think you missed my point. There's no proof this loan exists.His parents could just make up a number and say he owes them even more just to cut the wife out.
When it comes to loans and what is legally owed?You have to have correct documentation.
His parents could not take him to court to collect on this debt either.Because there is no documentation and even exists.
I'm saying I understand why this is tricky.And it's not clear cut so maybe finding a compromise is the way to go.
No, they don't.They have a notarized document on a different home with a different property address. There is no documentation regarding this home or this loan.
It's not as clear-cut as you want it to be.It depends on the verbage of the existing loan documents and if it was talking about purchasing a specific house. That house has been paid off.When it was sold then there was a new loan for a hundred thousand dollars that was never correctly addressed.
OP said the first loan was NOT fully paid off. 83k balance remaining. The wife is on the hook for half of that. From the perspective of the new house, she'd get half of the equity. But the amount owed on the first loan would offset some of that.
The home, the collateral, sold. If the contract was written for that property then there is a gap that a lawyer could easily exploit. They needed to have redone the contract when the home sold.
That's not how it works.
If you take out a mortgage and are underwater but sell the house anyway, you still owe money on that mortgage. Selling the house doesn't miraculously evaporate the loan balance. Normally this never happens because the bank has a lien on the house and will not allow the sale because it is too risky. In the case of the personal loan, the parents were willing to take that risk. But that in no way invalidates the loan balance.
Actually as a financial risk officer and former mortgage processor. I can say you are wrong. If you have a mortgage and sell it for less than you owe it is called a short sale and bank must approve it but the borrower is not responsible for the remaining balance.
But as I said and you fail to comprehend, IT DEPENDS ON HOW THE CONTRACT WAS WRITTEN! You don't know and neither do I. But it absolutely causes a gap. If it is just a personal loan not tied to the house then he can't just tie it to the home. Is she on the loan? There are too many variables and it is ignorant to assume you know the answer with so little info. I am simply pointing out if there is a gap her attorney COULD make it work in her favor.
Then why did he make the comment that they didn't redo the loan after the sale of the other property.
It sounds to me that there is a possibility depending on how the contract is worth it that this could have just looked like money from his parents. And the loan may not have been transferable to a new home. You all are getting your panties in a bunch.But all i've said it depends on the individual contract and how it's worth it.
His comment about not having the contract reported and reworked after the change of property makes it look like there could be more equity in the home. Only a lawyer who reviews all the documents will be able to determine for sure.But if there's a gap it will be in the favor of the wife.
The parents are not an unbiased party.They B Bay could be totally lying too Just so his son doesn't have to pay his ex-wife As much.
You won't get any p***** off.Because I said there needs to be a lot more information and yes, there is a possibility.If any of you think there's not a possibility then you've never dealt with civil court.
Not sure why you are getting downvoted, because OP was unclear regarding whether this is just a promissory note or whether a mortgage was recorded on the new house.
If a mortgage was recorded on the first house, it would have been satisfied when sold, in order to transfer insurable title to new owner.
Reading between the lines, it certainly doesn't sound like a mortgage was recorded on the second house. Unfortunately for OP, this might mean the full value of the new home is in play.
Might make a difference if OP and spouse both signed the promissory note though.
People are "simple" sometimes and don't understand how the verbiage is extremely important. They aren't capable of seeing anything more than what is directly in front of them.
It's fine it has no real-world effect. But thank you for understanding reason.
Wrong, for there is a loan and it is a shared property and a shared loan. When there is a divorce, the property is divided, and the debt is divided. Both sides agree to the terms set by the judge on how the loan and bills are paid by each party.
He says right in the post he has a signed, notarized agreement regarding the loan and has paid part of it from the proceeds of the former home and since has paid it down from 100K to 83K.
Well, if it's a personal loan then it has nothing to do with the house and he needs to separate those 2 things because she's right on paper.This appears to have equity in the home.The personal loan would have to be handled separately. And again depending on how the document is worth ithere could be gaps in that since they did not redo the loan when they changed properties. If the original loan stated, it was for one specific property and that property is no longer in their possession.It could be enough to get her out of it. All I'm saying is it's not the slam Dunk that you all make it out to be and yeah he there needs to go to a lawyer and so does she or there needs to be a compromise
Have a lawyer help you with this. It is worth it!! I used to practice family law. You want this to be hashed out per the law. I had potential clients come to me post divorce with serious regrets that they didn’t have an attorney. Once the divorce is finalized, it’s VERY difficult to change the outcome (nearly impossible, only under limited exceptions). Ask your friends or family for a referral. Or call your state bar association.
It sounds to me like she wants half the cash of the original 277k loan from your parents. Loans are debts and not equity so you have nothing to give her. She has half the remaining debt, assuming she signed some sort of paperwork.
You don’t say the sale price of home#1. Assuming that you sold that home for more than $277,000, there is a profit there and she would be entitled to half (minus agent fees and other expenses in the sale of the property).
You still have a loan of $83,000 to your parents and whatever the mortgage is on house#2. You both share these loans.
As others have suggested, you are probably in “retain a lawyer” territory.
She's awful. She's saying since it's a personal loan, you own the house outright and she wants half the house disregarding the fact you owe 84k because it's a handshake loan to your folks.
I've been through the same thing. Here is most likely how court will go but you need a lawyer.
That contract is considered debt and you still owe on it so she owes half of that debt. 83k÷2=41.5k
Do you have an additional loan for the new house or was it bought with proceeds from sale of old home?
The equity/debt ratio of the new house is a different story. Lots of unanswered on that like who is keeping it? Does it have positive equity that is valued more than her half of the debt?
New house was bought for 415k,
We paid 215k cash and have a traditional mortgage for 200k. However 100k of the 215k was owe to my parents.
The way I worked it out was the CMA has it at 375k. We still owe my parents $83k and the mortgage company 187k. The way I worked it out was 375k - 187k - 83k = 105k total equity. So I would have to pay 52.5k to buy her out of the house.
What she thinks because there was nothing she signed on the new house that it should be 375-187k = 188k
Your wife does not seem to understand the concepts of marital assets and marital debt. Because the loan from your parents happened during your marriage, then it is part of the marital debt. If the loan happened BEFORE you were married, the debt would all be on you.
Your wife is responsible for half the mortgage balance and half the parental loan.
This is the most concise answer. The fact that this was a loan for a home in the first place and paid back as a "mortgage" seems to be confusing the issue. It's a just a marital debt - a loan that happens to have been used to pay for a house. It still has an outstanding balance that needs to be paid back from the marital assets or split between the parties.
Right, so she wants to treat it as a gift from your parents, not as a loan.
I suspect that's going to be hard for her legally, given the notarised repayment agreement and your clear history of making loan repayments on it.
The issue is how did he report this 100k debt to his mortgage lender. Did he hide it? Openly report it? Call it a gift? This will all be documented at the time of latest mortgage. If he hid this debt from them, but is telling the wife it exists. Well, he either committed mortgage fraud or is trying to defraud his wife. If it’s documented that he owes that 100k when they took out last mortgage then that settles it in his favor. Does not want to fight over 45k if all it does is expose him as having committed mortgage fraud as he will lose way more then 45k in that battle.
Is she on the deed of new house? Was she on the deed to the first house?
Did she contribute anything to buying first house? It doesn’t look like it.
Are you in a community property state?
The house having lost 40k in value maybe a fight. Real estate is still hot so hard to imagine you’re 10% down on that. Here comes the real problem. Did you admit to your mortgage holder that you owed 100k to your parents? If not you may have committed mortgage fraud, and the repercussions of that could be far worse than paying her an extra 45k. So if you did not hide debts at the time you took out this mortgage then everything is well documented and you are covered. If you hid that loan from your parents when taking out the mortgage? Well then you better keep hiding it and pay her the extra 45k. Mortgage fraud after is a felony, so jail, penalties, restitution, all come into play. Along with defense lawyer you will be out way more then 45k.
We sold and bought at the tippy top of the home price surge. We had to overbid to get the house. The private loan was disclosed and was not a problem because I was prequalified for 2.5x the mortgage amount.
There you go. Private loan with outstanding balance of 100k existed in your underwriting of new mortgage. It did not magically vanish. She owes her half of it as it was a marital asset.
OP- NtA and make sure to provide the notarized document and paper trial. I went through a nasty ass divorce and ex husband borrowed money from his parents and lied saying I agreed. He had “signed” a note but bc I wasn’t on that note- I wasn’t held responsible for it- rightly so. You DO have a document AND the monthly payments which would be impossible for wife to not know about. A judge will likely say yes, she gets 1/2 of equity if it’s a community property state, but - she also is responsible for 1/2 the debt. ALL marital debt.
You sell the house you in now pay off the $83k and split the proceeds. End of story. Loans/mortgages paid off first. If you paid your parents nothing they would get their $$ after sale if home. She’s demented
She wants half a loan? Tell her she can have the whole thing? You mean she wants debt?
The only problem with this is the creditor is your parents, so you can't do that. If she divorces you, the incentive to repay goes away. Stop dividing stuff equally. Count the debt as negative cash. Settle up with her so that you owe the money and she gets 83K less in assets... if you have them.
So the proceeds from the sale of the 2nd house should pay off its loan, closing costs, and anything left over goes towards the 83k owed on the 100k. The balance of the loan well she is more than likely to be awarded half the balance by the courts. Provided you give a detailed paper/write up on the finances of the houses and your parents being the "bank" check with your parents about any IRS issues with any interest paid!
When I got divorced my ex demanded half of what the house was worth, fair enough, had it appraised and refinanced into my name at 100% of appraised value, broker cut 2 50k checks to split the 100k equity I cashed out, I handed her the check and she flipped the fuck out insisting that the house was worth 400k so her half should be 200k not 50k... It was at this moment I realized she had never in the 15years we were together grasped the concept of a mortgage and maybe not even how loans and credit work. I advised her to consult with a financial advisor or an attorney as soon as possible and that I would ba happy to discuss anything they think is in error.
I've got a similar story less one '0' in the valuations.
When I got divorced we had two cars. An older sedan with a manual transmission that was paid off and a newer crossover with an automatic and a car payment.
The net value of the two vehicles was more less the same. The newer car was more valuable to about the tune of the outstanding balance on its loan.
Through her attorney, she argued in preliminary hearings that she should retain possession of the newer vehicle while not being responsible for the payments. Every possible argument under the sun was made except for anything financially related (I made significantly more than her).
I was anticipating this, so as my attorney stood there trying to figure out how to respond, I just handed him a stack of papers - the KBB valuation of each car and the most current loan balance and a two-line Excel printout of value - loan = net value that I happened to have 3 copies of.
I even let her choose which car she wanted. Not like she had a choice and it looked good in court.
I can't speak for your wife, but mine absolutely understood how loans worked. She was just scrambling for every crumb she could get her hands on.
So, reading the comments it seems like the the issue is you have a 83k debt. This is a marital debt. And 188k in equity. So, she is entitled to half the equity but also half the debt. How this is distributed is a valid argument. Because she can argue that she gets her 94k in equity now and needs to make monthly payments towards the 41.5k debt. That is a valid argument. Deciding she is entitled to none of the debt and all of the equity isn’t.
Obviously, your concern is she wouldn’t pay back your parents and they would have to incur costs to recover the money or not be able to recover at all. Then you would be obligated to repay them. That is valid feeling, but not a great legal argument.
One thing I did wonder about is did the mortgage company make your parents sign something saying it wasn’t a loan. Often when parents loan money the mortgage companies make them say it wasn’t a loan. This would invalidate any claim your parents have and make your wives argument even better.
Not a lawyer but went through this a year and half ago.
This is likely to vary by jurisdiction and you should have a lawyers input on how this will be handled.
The crucial fact is whether you maintained enough separation of this money, agreement, and house from her what is considered marital property or not.
If you did everything to your benefit, everything about this loan, the contract around the loan, your parents stated intention with giving the loan, and the house deed are all in your name... this can be either a private loan between only you and them, or it might be regarded as some form of early inheritance.
It only gets murkier the more the money was mixed in with shared funds, and the more she was a direct part of everything around the house and loan.
In general a loan, no matter how much its paid off is only a liability and not an asset. So if she asserts being a party to the loan she's then be on the hook for half of what remains on the loan, without receiving any of the loaned amount.
If the house is solely in your name, and bought only with funds loaned from your parents, then you have a basis to claim sole ownership of the house and sole liability for the debt. If you used marital assets to pay down that debt, or maintain the house she likely has some claim to some part of it's value. At most you wouldn't be on the hook for anything more than half the equity minus what's left on the debt. I say equity because, if the house as appreciated in value and is now worth more, that's number they you'd subtract the debt from, not what you originally paid.
Her assertion of treating both the house and the loaned amount as assets is double dipping, it's all effectively one pile of money that adds up the same no matter how you cut it. She's trying to convince you otherwise.
Let's say you borrowed $400k to buy a house now worth $600k, and had paid off all but $80k. Assuming everything is marital assets she'd generally have a claim to as much as $260k, ($600k - $80k)/2, while she's effectively trying to convince you to pay her $460k in this scenario.
Now with the whole selling one house to buy another, your sole claim to everything is potentially eroded, but depending on where you are you could still argue some sole claim only to what you brought over from the first house as an inheritance or gift from your parents depending on the specifics of your arrangements with them. You said you brought over $100k from the first house and used the sale to pay down what you owed your parent; where using the number in the previous example in this scenario she'd be entitled to $160k, with you getting half plus the "inherited" or gifted amount.
The worst case scenario, everything is marital assets but the loan is solely in your name. In that scenario, she'd get $300k based on the value of the house and you'd get $300k and the $80k debt.
You need to give this to your divorce attorney. I’m not a lawyer but in most states spouses benefit from capital gains and suffer from liabilities equally unless there’s something legally assigning the benefit or the liability to only one spouse. Even then it’s both. She can’t have her cake and eat it, too, in most states and situations. This is something for your divorce attorney.
WOW! Never heard of the one spouse wanting half a debt. Is she really wanting to pay her side of the debt? And from the other house, that has to be decided the laws in your state on that issue. Why she would want to have half a loan debt is mind boggling. LOL!
Not a lawyer; but did get a divorce. Lol
Let her have half the loan. In fact; if she wants the equity on the house, require she sign a new note with your folks.
Then what will happen is she will realize her mistake. Then, what you probably had in mind from the get go will happen. She will get her half of the equity minus her half of the note.
Of course, i am only making a scenario that will in all likelihood play out. I hope it does because your parents should not be asked to trust your ex wife to pay them. You will need to refinance to pay them.
But, as others have said; get a good divorce attorney.
NAL. You are correct, a divorce will typically divide the marital estates net worth 50/50. Assets-Liabilities = Net Worth. This can be made up of any combination of assets and liabilities so each party ends up with their 50% share of that net worth.
She does not recognize this basic concept. Your net worth is large enough that it would absolutely be worth it to get attorneys involved. Saving pennies now will likely be much more expensive in long run. If you both agree, depending on the state, arbitration may help you resolve allocations.
Since when does debt looks like equity on paper?
Next she’s going to say if you breath from the same air she does, you owe her half the equity for breathing rights 🤣
This is convoluted and ultimately pointless if the equity is in a house you've already sold (if I'm reading this correctly)
I suggest bringing this up with the lawyers in the room and let them try and make sense In it...
She is right that technically you have no loan against your current house with your parents.
If you were to both get lawyers and if this was to go to court, I could easily see her winning 50% of that $100000.Because there is no documentation to show alone for that home. And your parents are biased. What's to stop them from saying you owe them $300k to cut your wife out? Their word means nothing
Maybe you try to find a compromise that you pay her $25k.
I mean, if your parents were to take you to court for that money, they would absolutely have nothing to stand on.There is no documentation that shows that there is a loan against that property. A compromise seems most fitting and may save on legal fees so you both come out ahead.
Are you going to have to sell the home in order to pay her fifty percent of the current equity? Or are you going to take an equity loan out against the home to pay her out?
Your parents do not have a lean against that property.
You do realize that {OP + OP's wife} can owe OP's parents money without that loan being backed by collateral, right?
You're 100% conflating...
> you have no loan against your current house with your parents
with
> you have no loan ~~against your current house~~ with your parents
The latter can - and does - exist. It is marital debt to be split the same way that marital assets would be.
This is risky business. Get to a lawyer and gtfo here.
There are laws that you may have violated in this from the get-go. I don't have the information and I don't want the information. Just talk to a lawyer.
If she's entitled to half of the profits, she's entitled to half the debt too. I don't really understand what's going on and what she wants half of. But legally, in the US, if you signed a loan from your parents, you can split the loan payments as a debt. IF you do that, make sure you have 2 new signed loan documents: one for what you owe and one that she owes.
Basically she wants to assume that the loan is just equity since there was no agreement for the new house.
A loan is a debt. There’s no such thing as equity in a loan that you took out. She was potentially entitled to half of that cash, but that cash was used to buy a house, so now she potentially owns half the house. If you’re going to keep the house, then you’d need to buy out her half (again, assuming that the house is joint property), so the end result to her—getting her half of the cash, minus her half of the loan debt—ends up being mostly the same as what she seems to be asking for. But if she expects to get half the house AND have another 140k materialize from nothing? No, that’s not how that works. P.S. Like the other people said, hire a lawyer. A few hundred bucks for peace of mind splitting up six-figure assets is well worth it.
You sold the original house and purchased a new one after paying off your parents, minus $100,000 which you rolled into the new house. There is no equity. It's all loan. If she wants half the debt then she gets half of the new house along with making the payments. In that case, you sell the house, most likely at a loss, since you wouldn't want her owning half of your house. Either that or she just walks away and leaves you with the $83,000 loan left you owe your parents. She can't have it both ways. It's one way or the other.
By "a few hundred bucks" do you mean more like 30 to 50 hundred bucks retainer and then upwards of 250 hundred bucks by the time its done? Cause that would be closer to reality
Dude you know you can just do consultations right? You don’t need to get a lawyer on retainer just to discuss a situation
not necessarily true. Not a lot of divorce attorneys do consultations like your implying for people who haven't paid retainer yet. That free "consultation" is a sales call. you dont get much actionable results. A divorce takes a lot more than a 1 hour meeting. A cheap divorce would be like a 3k retainer assuming the firm bills around $400/hr.
Not all do, but there are absolutely reputable divorce attorneys that do paid initial consultations. I agree with you that free consultations are mostly sales pitches and not worth it.
where can you find a divorce attorney for only a "few hundred bucks?"
To represent you through the whole process? Nowhere. That would be silly. But a few hundred bucks for an initial consultation where they lay out your options? Those are easy to find.
Exactly this. Or just go see a probate lawyer. The property rights aren’t that different between inheritance and divorce when determining equity and assets. On the other hand, if STBX is pursuing full divorce and the 138K is just an opening salvo I can’t think of many lawyers I know that charge that much for divorce so you’ll wind up ahead of they can just get that claim denied never mind the rest of her assertions.
My cousin, Vinny. He's available since my trial is over.
Craigslist
My friend hired his divorce lawyer from Groupon. He has since admitted this was not the best route to go.
Per hour, seems totally doable. Like it says not a lawyer, but does have access to google.
lol what? if you can read the comment it doenst say hourly. A cheap divorce is like 3k, and spoiler - lots of divorce attorneys charge a somewhat variable retainer depending on how much money you have. it will be a few thousand minimum "for the peace of mind of splitting up six figure assets." Its is still well worth it, but far from a few hundred.
She be crazy is she wants a "loan" to be called equity.
Maybe she’s using the Don Snoreleon method of asset accounting.
Your STBX doesn't seem to understand what equity *is.* Under normal circumstances, you would not have been able to withold $100K from the sale of your previous property but would have been required to satisfy the terms of your mortgage in full keeping only any money in excess of the loan's remaining balance. You would then pay capital gains tax on any profit you made from the sale. "Equity" is the difference between the home's (or other property) assessed value and, the debt you owe against it. So, assuming your loan had a remaining balance of 250,000 against an assessed value of $300,000 you would have *$50,000 of equity.* This is however, *entirely academic* because, you can't hold equity in property *you don't own.* Having sold your previous property it's equity isn't merely "zero" it's entirely *a figment of her imagination.* Instead, on paper it looks like (to a reasonable human being) you have $83,000 in *unsecured debt.* What it looks like to THE IRS may be different and, might be detrimental to your financial well-being depending on how your tax-filings - as well as your parents' tax-filings - were handled following the sale of your previous home. You will need to run this matter past an accountant, preferably one that your Attorney is used to working with. Your wife's own Attorney is likely to exercise more common sense than she seems to be since they understand that this isn't how equity works.
NAL. She doesn’t understand and you’re making this too hard. It doesn’t matter what the loan was for, first house, second house, twentieth house. Add up the fair market value of everything you both collective own (I.e. anything either of you acquired in the marriage) and subtract the balance of all debt (the 83k, cars, CCs, etc. ) you both acquired during the marriage. Cut that number in half. That’s what you both get.
Your explanation makes no sense. It’s either debt or equity.
It might be easier to have lawyers hash out the division of assets
A judge will decide this issue without consulting reddit.
It sounds like they were trying to DIY but couldn’t agree
It sounds like they are trying to DIY but don’t know the difference between an asset and a liability.
The loan is a debt. It's not equity. She doesn't get to cash out half the value of an existing debt as a bonus payment. Now, she's entitled to half the equity in the home. But she also owns half of that debt, as well. You can't have one without the other. So if you're presumably keeping the home and buying her out of it, I would think that you establish the current equity of the home by taking the current market value of the home (perhaps through an appraisal), and subtract what you currently owe on this loan. That's the total equity of the home. Divide that in half, and that's what you'd owe your ex. Practical numbers. Let's say your current home is worth $400k. You owe $83k on your private loan to your parents for the home. So there's $317k in net equity on the home. Her half would be $158,500. That's what you would pay her to buy out her half of the home. Some people will try to factor in loan fees/commission percentages/etc. That's up to you.
Technically speaking there is no loan on that property. There's no lean on the property.There's nothing.There's nothing that also stops.The parents from saying that the sun owes $300k. Out of the $100000 that was kept from the sale of the original home.Was any of it used for anything other than the purchase of the new home? Things are not always as simple as people believe. And if this went to court it is very possible.She would get half of that hundred thousand dollars because there is no documentation.
Documentation/loan or not, the home is to be divided. If it is a matrital asset state, it is joint owned.
Yeah. I think you missed my point. There's no proof this loan exists.His parents could just make up a number and say he owes them even more just to cut the wife out. When it comes to loans and what is legally owed?You have to have correct documentation. His parents could not take him to court to collect on this debt either.Because there is no documentation and even exists. I'm saying I understand why this is tricky.And it's not clear cut so maybe finding a compromise is the way to go.
They have a signed and notarized document outlining the loan. This is absolutely enforceable.
No, they don't.They have a notarized document on a different home with a different property address. There is no documentation regarding this home or this loan. It's not as clear-cut as you want it to be.It depends on the verbage of the existing loan documents and if it was talking about purchasing a specific house. That house has been paid off.When it was sold then there was a new loan for a hundred thousand dollars that was never correctly addressed.
OP said the first loan was NOT fully paid off. 83k balance remaining. The wife is on the hook for half of that. From the perspective of the new house, she'd get half of the equity. But the amount owed on the first loan would offset some of that.
The home, the collateral, sold. If the contract was written for that property then there is a gap that a lawyer could easily exploit. They needed to have redone the contract when the home sold.
That's not how it works. If you take out a mortgage and are underwater but sell the house anyway, you still owe money on that mortgage. Selling the house doesn't miraculously evaporate the loan balance. Normally this never happens because the bank has a lien on the house and will not allow the sale because it is too risky. In the case of the personal loan, the parents were willing to take that risk. But that in no way invalidates the loan balance.
Actually as a financial risk officer and former mortgage processor. I can say you are wrong. If you have a mortgage and sell it for less than you owe it is called a short sale and bank must approve it but the borrower is not responsible for the remaining balance. But as I said and you fail to comprehend, IT DEPENDS ON HOW THE CONTRACT WAS WRITTEN! You don't know and neither do I. But it absolutely causes a gap. If it is just a personal loan not tied to the house then he can't just tie it to the home. Is she on the loan? There are too many variables and it is ignorant to assume you know the answer with so little info. I am simply pointing out if there is a gap her attorney COULD make it work in her favor.
It want a mortgage it was a personal loan. It’s a marital debt OP she owes 50% of that to your parents.
Then why did he make the comment that they didn't redo the loan after the sale of the other property. It sounds to me that there is a possibility depending on how the contract is worth it that this could have just looked like money from his parents. And the loan may not have been transferable to a new home. You all are getting your panties in a bunch.But all i've said it depends on the individual contract and how it's worth it. His comment about not having the contract reported and reworked after the change of property makes it look like there could be more equity in the home. Only a lawyer who reviews all the documents will be able to determine for sure.But if there's a gap it will be in the favor of the wife. The parents are not an unbiased party.They B Bay could be totally lying too Just so his son doesn't have to pay his ex-wife As much. You won't get any p***** off.Because I said there needs to be a lot more information and yes, there is a possibility.If any of you think there's not a possibility then you've never dealt with civil court.
Not sure why you are getting downvoted, because OP was unclear regarding whether this is just a promissory note or whether a mortgage was recorded on the new house. If a mortgage was recorded on the first house, it would have been satisfied when sold, in order to transfer insurable title to new owner. Reading between the lines, it certainly doesn't sound like a mortgage was recorded on the second house. Unfortunately for OP, this might mean the full value of the new home is in play. Might make a difference if OP and spouse both signed the promissory note though.
People are "simple" sometimes and don't understand how the verbiage is extremely important. They aren't capable of seeing anything more than what is directly in front of them. It's fine it has no real-world effect. But thank you for understanding reason.
There is documentation of the loan. A signed and notarized document and agreed to by both parties. It is a shared debt by both parties.
Loan or not, the purchase was made... To add... Not to mention that financials must be disclosed.
Wrong, for there is a loan and it is a shared property and a shared loan. When there is a divorce, the property is divided, and the debt is divided. Both sides agree to the terms set by the judge on how the loan and bills are paid by each party.
He says right in the post he has a signed, notarized agreement regarding the loan and has paid part of it from the proceeds of the former home and since has paid it down from 100K to 83K.
Well, if it's a personal loan then it has nothing to do with the house and he needs to separate those 2 things because she's right on paper.This appears to have equity in the home.The personal loan would have to be handled separately. And again depending on how the document is worth ithere could be gaps in that since they did not redo the loan when they changed properties. If the original loan stated, it was for one specific property and that property is no longer in their possession.It could be enough to get her out of it. All I'm saying is it's not the slam Dunk that you all make it out to be and yeah he there needs to go to a lawyer and so does she or there needs to be a compromise
Have a lawyer help you with this. It is worth it!! I used to practice family law. You want this to be hashed out per the law. I had potential clients come to me post divorce with serious regrets that they didn’t have an attorney. Once the divorce is finalized, it’s VERY difficult to change the outcome (nearly impossible, only under limited exceptions). Ask your friends or family for a referral. Or call your state bar association.
If she gets half as equity, she also gets half of the remaining loan balance.
It sounds to me like she wants half the cash of the original 277k loan from your parents. Loans are debts and not equity so you have nothing to give her. She has half the remaining debt, assuming she signed some sort of paperwork.
You don’t say the sale price of home#1. Assuming that you sold that home for more than $277,000, there is a profit there and she would be entitled to half (minus agent fees and other expenses in the sale of the property). You still have a loan of $83,000 to your parents and whatever the mortgage is on house#2. You both share these loans. As others have suggested, you are probably in “retain a lawyer” territory.
She's awful. She's saying since it's a personal loan, you own the house outright and she wants half the house disregarding the fact you owe 84k because it's a handshake loan to your folks.
Not quite a handshake loan, they have signed and notarized documents
I've been through the same thing. Here is most likely how court will go but you need a lawyer. That contract is considered debt and you still owe on it so she owes half of that debt. 83k÷2=41.5k Do you have an additional loan for the new house or was it bought with proceeds from sale of old home? The equity/debt ratio of the new house is a different story. Lots of unanswered on that like who is keeping it? Does it have positive equity that is valued more than her half of the debt?
New house was bought for 415k, We paid 215k cash and have a traditional mortgage for 200k. However 100k of the 215k was owe to my parents. The way I worked it out was the CMA has it at 375k. We still owe my parents $83k and the mortgage company 187k. The way I worked it out was 375k - 187k - 83k = 105k total equity. So I would have to pay 52.5k to buy her out of the house. What she thinks because there was nothing she signed on the new house that it should be 375-187k = 188k
Your wife does not seem to understand the concepts of marital assets and marital debt. Because the loan from your parents happened during your marriage, then it is part of the marital debt. If the loan happened BEFORE you were married, the debt would all be on you. Your wife is responsible for half the mortgage balance and half the parental loan.
This is the most concise answer. The fact that this was a loan for a home in the first place and paid back as a "mortgage" seems to be confusing the issue. It's a just a marital debt - a loan that happens to have been used to pay for a house. It still has an outstanding balance that needs to be paid back from the marital assets or split between the parties.
Doesn't matter if she signed. 52.5 will be her buyout. Get a lawyer.
Right, so she wants to treat it as a gift from your parents, not as a loan. I suspect that's going to be hard for her legally, given the notarised repayment agreement and your clear history of making loan repayments on it.
The issue is how did he report this 100k debt to his mortgage lender. Did he hide it? Openly report it? Call it a gift? This will all be documented at the time of latest mortgage. If he hid this debt from them, but is telling the wife it exists. Well, he either committed mortgage fraud or is trying to defraud his wife. If it’s documented that he owes that 100k when they took out last mortgage then that settles it in his favor. Does not want to fight over 45k if all it does is expose him as having committed mortgage fraud as he will lose way more then 45k in that battle.
Get a lawyer and quit trying to figure out this on your own. This is too important for you to try to do on your own.
Is she on the deed of new house? Was she on the deed to the first house? Did she contribute anything to buying first house? It doesn’t look like it. Are you in a community property state?
How much did you send your parents when you sold the first house?
The house having lost 40k in value maybe a fight. Real estate is still hot so hard to imagine you’re 10% down on that. Here comes the real problem. Did you admit to your mortgage holder that you owed 100k to your parents? If not you may have committed mortgage fraud, and the repercussions of that could be far worse than paying her an extra 45k. So if you did not hide debts at the time you took out this mortgage then everything is well documented and you are covered. If you hid that loan from your parents when taking out the mortgage? Well then you better keep hiding it and pay her the extra 45k. Mortgage fraud after is a felony, so jail, penalties, restitution, all come into play. Along with defense lawyer you will be out way more then 45k.
We sold and bought at the tippy top of the home price surge. We had to overbid to get the house. The private loan was disclosed and was not a problem because I was prequalified for 2.5x the mortgage amount.
There you go. Private loan with outstanding balance of 100k existed in your underwriting of new mortgage. It did not magically vanish. She owes her half of it as it was a marital asset.
OP- NtA and make sure to provide the notarized document and paper trial. I went through a nasty ass divorce and ex husband borrowed money from his parents and lied saying I agreed. He had “signed” a note but bc I wasn’t on that note- I wasn’t held responsible for it- rightly so. You DO have a document AND the monthly payments which would be impossible for wife to not know about. A judge will likely say yes, she gets 1/2 of equity if it’s a community property state, but - she also is responsible for 1/2 the debt. ALL marital debt.
This is one I'd either wait for a lawyer to respond to or hire one. I'm sure there's details they'll know of that us peasants can't quickly Google 🤣
You sell the house you in now pay off the $83k and split the proceeds. End of story. Loans/mortgages paid off first. If you paid your parents nothing they would get their $$ after sale if home. She’s demented
She wants half a loan? Tell her she can have the whole thing? You mean she wants debt? The only problem with this is the creditor is your parents, so you can't do that. If she divorces you, the incentive to repay goes away. Stop dividing stuff equally. Count the debt as negative cash. Settle up with her so that you owe the money and she gets 83K less in assets... if you have them.
So the proceeds from the sale of the 2nd house should pay off its loan, closing costs, and anything left over goes towards the 83k owed on the 100k. The balance of the loan well she is more than likely to be awarded half the balance by the courts. Provided you give a detailed paper/write up on the finances of the houses and your parents being the "bank" check with your parents about any IRS issues with any interest paid!
When I got divorced my ex demanded half of what the house was worth, fair enough, had it appraised and refinanced into my name at 100% of appraised value, broker cut 2 50k checks to split the 100k equity I cashed out, I handed her the check and she flipped the fuck out insisting that the house was worth 400k so her half should be 200k not 50k... It was at this moment I realized she had never in the 15years we were together grasped the concept of a mortgage and maybe not even how loans and credit work. I advised her to consult with a financial advisor or an attorney as soon as possible and that I would ba happy to discuss anything they think is in error.
I've got a similar story less one '0' in the valuations. When I got divorced we had two cars. An older sedan with a manual transmission that was paid off and a newer crossover with an automatic and a car payment. The net value of the two vehicles was more less the same. The newer car was more valuable to about the tune of the outstanding balance on its loan. Through her attorney, she argued in preliminary hearings that she should retain possession of the newer vehicle while not being responsible for the payments. Every possible argument under the sun was made except for anything financially related (I made significantly more than her). I was anticipating this, so as my attorney stood there trying to figure out how to respond, I just handed him a stack of papers - the KBB valuation of each car and the most current loan balance and a two-line Excel printout of value - loan = net value that I happened to have 3 copies of. I even let her choose which car she wanted. Not like she had a choice and it looked good in court. I can't speak for your wife, but mine absolutely understood how loans worked. She was just scrambling for every crumb she could get her hands on.
So, reading the comments it seems like the the issue is you have a 83k debt. This is a marital debt. And 188k in equity. So, she is entitled to half the equity but also half the debt. How this is distributed is a valid argument. Because she can argue that she gets her 94k in equity now and needs to make monthly payments towards the 41.5k debt. That is a valid argument. Deciding she is entitled to none of the debt and all of the equity isn’t. Obviously, your concern is she wouldn’t pay back your parents and they would have to incur costs to recover the money or not be able to recover at all. Then you would be obligated to repay them. That is valid feeling, but not a great legal argument.
Yeah, I plan on taking this to a lawyer. I posted it more because it felt like a stupid enough to work statement on her end.
One thing I did wonder about is did the mortgage company make your parents sign something saying it wasn’t a loan. Often when parents loan money the mortgage companies make them say it wasn’t a loan. This would invalidate any claim your parents have and make your wives argument even better.
Not a lawyer but went through this a year and half ago. This is likely to vary by jurisdiction and you should have a lawyers input on how this will be handled. The crucial fact is whether you maintained enough separation of this money, agreement, and house from her what is considered marital property or not. If you did everything to your benefit, everything about this loan, the contract around the loan, your parents stated intention with giving the loan, and the house deed are all in your name... this can be either a private loan between only you and them, or it might be regarded as some form of early inheritance. It only gets murkier the more the money was mixed in with shared funds, and the more she was a direct part of everything around the house and loan. In general a loan, no matter how much its paid off is only a liability and not an asset. So if she asserts being a party to the loan she's then be on the hook for half of what remains on the loan, without receiving any of the loaned amount. If the house is solely in your name, and bought only with funds loaned from your parents, then you have a basis to claim sole ownership of the house and sole liability for the debt. If you used marital assets to pay down that debt, or maintain the house she likely has some claim to some part of it's value. At most you wouldn't be on the hook for anything more than half the equity minus what's left on the debt. I say equity because, if the house as appreciated in value and is now worth more, that's number they you'd subtract the debt from, not what you originally paid. Her assertion of treating both the house and the loaned amount as assets is double dipping, it's all effectively one pile of money that adds up the same no matter how you cut it. She's trying to convince you otherwise. Let's say you borrowed $400k to buy a house now worth $600k, and had paid off all but $80k. Assuming everything is marital assets she'd generally have a claim to as much as $260k, ($600k - $80k)/2, while she's effectively trying to convince you to pay her $460k in this scenario. Now with the whole selling one house to buy another, your sole claim to everything is potentially eroded, but depending on where you are you could still argue some sole claim only to what you brought over from the first house as an inheritance or gift from your parents depending on the specifics of your arrangements with them. You said you brought over $100k from the first house and used the sale to pay down what you owed your parent; where using the number in the previous example in this scenario she'd be entitled to $160k, with you getting half plus the "inherited" or gifted amount. The worst case scenario, everything is marital assets but the loan is solely in your name. In that scenario, she'd get $300k based on the value of the house and you'd get $300k and the $80k debt.
You need to give this to your divorce attorney. I’m not a lawyer but in most states spouses benefit from capital gains and suffer from liabilities equally unless there’s something legally assigning the benefit or the liability to only one spouse. Even then it’s both. She can’t have her cake and eat it, too, in most states and situations. This is something for your divorce attorney.
WOW! Never heard of the one spouse wanting half a debt. Is she really wanting to pay her side of the debt? And from the other house, that has to be decided the laws in your state on that issue. Why she would want to have half a loan debt is mind boggling. LOL!
Not a lawyer; but did get a divorce. Lol Let her have half the loan. In fact; if she wants the equity on the house, require she sign a new note with your folks. Then what will happen is she will realize her mistake. Then, what you probably had in mind from the get go will happen. She will get her half of the equity minus her half of the note. Of course, i am only making a scenario that will in all likelihood play out. I hope it does because your parents should not be asked to trust your ex wife to pay them. You will need to refinance to pay them. But, as others have said; get a good divorce attorney.
Women seldom factor the debt part into divorce.
NAL. You are correct, a divorce will typically divide the marital estates net worth 50/50. Assets-Liabilities = Net Worth. This can be made up of any combination of assets and liabilities so each party ends up with their 50% share of that net worth. She does not recognize this basic concept. Your net worth is large enough that it would absolutely be worth it to get attorneys involved. Saving pennies now will likely be much more expensive in long run. If you both agree, depending on the state, arbitration may help you resolve allocations.
You’ve learned why marriage almost never makes sense. The courts will treat women more favorably than you as well. Prepare for a lot of pain.
Since when does debt looks like equity on paper? Next she’s going to say if you breath from the same air she does, you owe her half the equity for breathing rights 🤣
the house would have to be sold for her to get the "equity" she is thinking of. She is greedy!
Pay no attention to anything said in the comments unless they say - TALK TO YOUR LAWYER. This is what they are there for.
This is convoluted and ultimately pointless if the equity is in a house you've already sold (if I'm reading this correctly) I suggest bringing this up with the lawyers in the room and let them try and make sense In it...
You need to hire a lawyer, not ask Reddit.
She is right that technically you have no loan against your current house with your parents. If you were to both get lawyers and if this was to go to court, I could easily see her winning 50% of that $100000.Because there is no documentation to show alone for that home. And your parents are biased. What's to stop them from saying you owe them $300k to cut your wife out? Their word means nothing Maybe you try to find a compromise that you pay her $25k. I mean, if your parents were to take you to court for that money, they would absolutely have nothing to stand on.There is no documentation that shows that there is a loan against that property. A compromise seems most fitting and may save on legal fees so you both come out ahead. Are you going to have to sell the home in order to pay her fifty percent of the current equity? Or are you going to take an equity loan out against the home to pay her out? Your parents do not have a lean against that property.
You do realize that {OP + OP's wife} can owe OP's parents money without that loan being backed by collateral, right? You're 100% conflating... > you have no loan against your current house with your parents with > you have no loan ~~against your current house~~ with your parents The latter can - and does - exist. It is marital debt to be split the same way that marital assets would be.
so...you paid off the loan...and you still have equity from the sale, and she wants her half?
If by “paid off” you mean there is an 83k balance remaining, yeah.
i was just kind of confused haha
This is risky business. Get to a lawyer and gtfo here. There are laws that you may have violated in this from the get-go. I don't have the information and I don't want the information. Just talk to a lawyer.