Property division?


#1

The house is deeded in both of our names but the mortgage is only in mine. He says that he wants the house. What would need to be done to change ownership in this situation?


#2

You can draft a Separation Agreement between the two of you, in which you give your ex the house. If this is done and you both agree, then you are no longer responsible for the house. The separation agreement cannot bind the bank (who holds the mortgage) though. The reason is because the bank relied on your credit rating to issue the loan, and will rely on you to pay the loan if the person defaults. If he does not pay the loan, you can sue him for breach of contract.

When he actually does re-finance (gets a new loan in his sole and separate name) you will then be relived of any connection to, or liability for the loan. You can put in your agreement that if he cannot refinance, then he must sell the property.


#3

To make sure I understand, he would only need to refinance the existing loan amount. It wouldn’t have to be an actual purchase with a $ amount based on an appraisal or anything like that? And there would be a new deed drawn up in just his name once the refinance was done, correct?


#4

Yes, he can refinance just the current home loan amount. After he does so, he could take title to the deed solely in his name. If there is equity in the house, then you could be entitled to half of that in an equitable distribution. Likewise, if there is negative equity then you could be held responsible for half of that marital debt in an ED. You do not have to do an ED of course.


#5

Would the bank typically have an appraisal completed to determine the value for the refinance? And would that value be the basis of determining equity - negative or positive?


#6

The spouse who stays in the home normally refinances the loan into their sole name and then pays the other spouse one half of the equity in the home. An appraisal will be necessary to determine the value of the home, and the deed will have to be signed over for the refinance to go through. The difference between the appraised value and the loan amount represents your total equity, and from that you should be able to ascertain if it is positive or negative.