QUESTION
What happens between Co-debtor and Co-owner of property and one party filed for bankruptcy?
Asked on Mar 14th, 2013 on Foreclosures - California
More details to this question:
My daughter and I own a home. We are both on the deed and both on the mortgage. My daughter has not lived in the home or contributed to the mortgage in over 2 years. She recently filed for bankruptcy and I believe the mortgage was discharged. Originally, he was going to quit claim his interest to me, but now refuses. I have fallen behind on the mortgage and the bank said they would let me refinance, but only if I could get his name off the deed. Not sure what to do.
4 ANSWERS
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The genders seem confusing in your question your daughter is mentioned and then a 'he' a few times. What the debtor discharged in bankruptcy was her (his?) personal obligation to pay the mortgage note, not the mortgage itself. Since you are apparently still liable on the mortgage, and the lender is willing to refinance, it sounds like a good idea to explore that possibility further. You need not lose the home.
Answered on Mar 17th, 2013 at 6:04 PM
About the only consequence to you of the bankruptcy is that the automatic stay would postpone any foreclosure until the bank got an order for relief from stay from the bankruptcy court. But it does not appear that the home is in foreclosure because you are talking to the bank about refinancing. If co-owners cannot agree on the disposition of their property, the remedy is a petition for partition in the superior court. The problem is that the judge can't just force your daughter to give up her ownership for nothing. If she defended the suit and was able to produce evidence of mortgage, insurance, or tax payments she made or payments by her for improvements to the house, you would have to buy out her interest. The court would appoint an appraiser to determine your current equity (fair market value of the property less loan balance). The buy-out amount would be a percentage calculated as your daughter's contributions to the equity divided by the total equity multiplied by total equity. If your daughter doesn't respond to the suit, you would be awarded judgment by default. But there would still be a prove-up hearing where you would have to produce evidence of the relative contributions by you and your daughter. You would have to have a lawyer help you with this. Most county bar associations will arrange a consultation with a specialist in a particular area of the law for a nominal fee. Or you can find certified specialists in various legal areas listed on the California State Bar Website.
Answered on Mar 15th, 2013 at 6:00 AM
1st trust deeds are not usually discharged in Bankruptcy, only 2nds. You may have to file a petition action to get her off the deed. You also might try another lender.
Answered on Mar 15th, 2013 at 5:49 AM
1 Award
In California, you would have to file a partition lawsuit to get the property in your name alone, if the co-owner refuses to quitclaim his interest in the property to you. The process will take at least six months, but more likely around a year to complete, possibly longer, especially if your co-owner fights you. Attorneys fees and costs will likely be around $30,000.
Answered on Mar 15th, 2013 at 5:48 AM