QUESTION
How is a house $100,000 under water handled in a divorce settlement?
Asked on Nov 15th, 2012 on Divorce - California
More details to this question:
The house is over $100,000 underwater. One of the spouses wants to keep the house. How is this handled in the divorce settlement?
13 ANSWERS
Steven D. Dunnings
Ask your lawyer. If you do not have one, get one.
Answered on Apr 30th, 2013 at 11:28 PM
Personal Injury Attorney serving Pacific, MO
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Melvin G. Franke
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The court will allocate the debt.
Answered on Nov 20th, 2012 at 4:44 AM
Family Law Attorney serving Temecula, CA
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Landon Rainwater Robinson LLP
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One party must be able to obtain a new loan removing the other spouse. If they can not get a new loan the court orders the home sold. You may find a short sale is the only option if a new loan can not be obtained. If the property is foreclosed both parties will be equally on the hook for any judgment.
Answered on Nov 19th, 2012 at 9:21 AM
Family Law Attorney serving Santa Ana, CA
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Law Office of Rhonda Ellifritz
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One of the problems is that if the house is that far under, the spouse not keeping the house may not be able to get their name off the loan. Many people are facing this dilemma, and you would have to decide if your ex is reliable enough to make payments and eventually be able to take the loan over.
Answered on Nov 19th, 2012 at 9:21 AM
With the crash in the real estate market, the Court's have been consistently setting negative valued houses at a zero value. Meaning the person gets the house without having to pay anything for it. The bigger issue is, how does the spouse who is not getting the house, get their name off the loan. We usually set a time table, 12-18 months to refinance the residence, or short sale it. Credit is a big issue these days, and the receiving spouse has nothing to lose by not paying the payment, except damaged credit. Short sales are not as damaging to your credit.
Answered on Nov 19th, 2012 at 9:19 AM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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The spouse who wants it gets it and holds the other harmless regarding the indebtedness.
Answered on Nov 19th, 2012 at 9:16 AM
Debts, obligations, and liabilities are equitably distributed just like personal property. If the parties can decide on who gets what or who bears what liabilities then you'll spare yourself having the Court decide it. How it gets handled depends on how creative the spouses can get. In this case I would suggest off-setting for the spouse who wants to keep the house with the one who wants to walk away free and clear. Call or email to discuss possible scenarios.
Answered on Nov 19th, 2012 at 9:13 AM
Family Law Attorney serving West Bloomfield, MI
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Law Offices of Eugene Lumberg and Eric S. Lumberg
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The house is handled like any other marital debt. One party can elect to stay and be responsible for the mortgage and any shortfall. On the other hand, the house can also be sold and any shortfall divided up along with the rest of the marital estate. You should consult with an attorney to discuss in further detail and decide on the best option for your financial position and well-being.
Answered on Nov 19th, 2012 at 9:10 AM
Business Law Attorney serving Bingham Farms, MI
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James T. Weiner, P.C.
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It depends upon the agreement of the parties.. Generally if a house has equity.. the parties agree to split the equity and the party that keeps the house pays the mortgage and refinances it to get the other off the mortgage.. So..has the spouse that wants to keep the house agreed to pay the mortgage? Unless both spouses can qualify for a mortgage reduction or both parties go bankrupt to discharge their personal liability on the mortgage, without bringing substantial money to the table they will not be able to refinance to get the other party off the mortgage...so there is a risk for the spouse that is not keeping the house.. that the one keeping the house stops paying the mortgage and both spouses credit gets hit.
Answered on Nov 19th, 2012 at 9:07 AM
Probate Law Attorney serving Colorado Springs, CO
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John E. Kirchner
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Your question cannot be answered without understanding the entire financial situation and other terms of any divorce settlement. The simple answer is that the parties need to work out to their own satisfaction how to deal with the problem. If they cannot agree, it will be up to a judge to decide after looking at all of the relevant information and hearing the arguments of each side. There are no "rules", but a very likely result is that the court will give the house to the party who wants it, but subject that party taking all or the major part of the liability on the existing loan.
Answered on Nov 19th, 2012 at 9:06 AM
There are several options to handle the house that is 'underwater'. First, if one party wants to keep the house and the other party does not want to remain on the Note, the party wanting to keep the house would have to either assume the loan or refinance. Second, if neither one of those options can work, the house could be placed on the market for a Short Sale. Third, if the party not wanting the house stays on the Note, that party is (1) still jointly responsible to the lender and, (2) would probably not qualify to purchase another home, given that party's position on the existing Note. Of course, there is the question of income. Depending upon the income of each party, options may change. Good luck.
Answered on Nov 19th, 2012 at 8:51 AM
Generally it is treated as a negative asset and the spouse receiving it is shown as receiving nothing. Everything else is valued and divided equally. the spouse receiving the house usually has to refinance or do something to protect the other spouse from the debt on the mortgage.
Answered on Nov 19th, 2012 at 8:39 AM
Divorce/Family Law Attorney serving Carlsbad, CA
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Anne B. Howard, A Professional Law Corporation
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Depends, I'd say they get the house at a $0 value. But if the other party is still on the loan, got to have the settlement properly written up.
Answered on Nov 19th, 2012 at 8:38 AM