ED of debt including loss of equity in home


#1

My stbx is asking for half of the ernest money that was put down on home 9 months before our separation. With the housing market and looking at comparable homes that have sold in my area, I am positive if sold today their would be a loss in equity. For sure after realtor fees, closing costs etc. Can the loss of the equity become part of the debt that is owed to be split, or is he intitled to 1/2 the earnest money/down payment? How does this work?


#2

I am not entirely clear on what you are asking, negative equity can be divided as part of ED.


#3

Sorry,
I am saying that if the marital home sold today it would be less than what was owed at DOS and waht we paid for it. I am figuring incuding realtor fees and closing costs, there woudl be a loss of almost $22,000.00. My stbx says that he is intitled to half of the down payment that we used. My question is: Is he intitled to half the down payment although there is a loss of equity in home? Dont’ we split that loss in ED?


#4

The home is valued at the date of separation, and passive losses (market decrease) are also accounted for. He is not entitled to half of a down payment, he is tilted to half the value (or debt) on the house when it does sell, so yes, the loss is should be split.


#5

Will I be made to sell it in order to prove the loss of equity or can I have it appraised?


#6

It can be appraised, and the negative equity will be considered as part of ED.


#7

Ok, thank you Erin.
Do I need to hire a licensed Real Estate Appraiser or can I have a Realtor appraise the value of my home?


#8

You may use either to appraise the current value of your home. Just be aware that the other party will likely disagree with whatever value you end up with, particularly if it results in negative equity.


#9

How then is it proved to the judge that the home has negative equity? I paid $300,000.00 for it, owe $291,000.00 on it and the exact same home (with more upgrades) sold last month in same community for $295,000.00. the $4,000.00 wouldn’t even cover realtor fees if sold, which I do not want to sell.


#10

A judge will be able to infer negative equity in your home from the evidence you present from your appraisal. If your ex counters that with a differing appraisal, then the judge will exercise his discretion and make a decision based on the evidence presented. Negative equity is counted as a part of equitable distribution. While I cannot predict the outcome of any one case, I can say that if you can afford the house and can refinance it to remove your ex from the loan, then you likely won’t be forced to sell.


#11

Thank you. My ex is not on the loan, only on the deed. I can afford it though it is tough. I just go without other things. I hope the judge does not make me sell it and lose money. Also, just to clarify. Will the judge hear an alimony case before ED? My stbx calendared the alimony case for Oct, but the first step of ED is not scheduled until November. Does the judge always order mediation in wake co if we cannot divide property ourselves?


#12

Alimony cannot be heard until (or at the same time) as ED, as the ED is a factor in Alimony. A judge can order mediation in the event of a disputed ED before it is allowed to proceed to trial.