Equitable Distribution of Assets With Negative Equity
For a while, everything was going great. You were so successful in your career that you were able to qualify for a mortgage loan and buy a house. After you paid down the mortgage for a few years, building some equity in your house, you met the man of your dreams. You got married, and he moved into your house. Life happens to everyone, though. Your financial situation worsens, and you take on more mortgage debt. The financial struggles take a toll on your marriage, and eventually you and your spouse separate. By the time you file for divorce, your mortgage is underwater. Divorce is never easy even when your net worth would be the envy of almost everyone you know; it is even worse when, by the time the dust settles, there is nothing to go around except debt. If you are dealing with the double misfortunes of divorce and an underwater home mortgage loan, contact a Boca Raton divorce lawyer.
Divorce and Underwater Mortgages: Misery Loves Company
When one spouse owned the marital home as a non-marital asset, but the other spouse moves in when the parties get married, the spouse who originally owned the home almost always keeps it after the divorce. The house itself is a non-marital asset, as is everything you have owned since before you met your spouse. Of course, it is not fair for your spouse to walk away empty-handed after, throughout your marriage, he used his employment income, and perhaps even money from his nonmarital savings account, to contribute to mortgage payments and to renovate the house. The house is a non-marital asset, but the amount of its appreciation during the marriage is marital. You will probably have to pay your spouse an equalizing payment, sometimes known as lump sum alimony, to compensate for his share of the appreciation of the house’s value.
In 2015, a woman who had owned her house since before marrying her husband got divorced. The sticker price of the house had appreciated during the marriage, simply because of market forces and also because the husband had contributed to remodeling projects. The court ordered the wife to pay the husband an equalizing payment when the divorce became final. The wife appealed this decision, since the house was encumbered by two mortgages, such that its current value was less than the total amount owed on the two mortgage loans. In other words, she had negative equity in the house. On appeal, the court sided with the wife. It determined that, when the marital home is a non-marital asset, but it has negative equity at the time of the divorce, the court should treat the amount of appreciation of the house as zero; therefore, the wife was not obligated to make an equalizing payment to the husband.
Contact Schwartz | White About Divorce in Times of Financial Distress
A South Florida family law attorney can help you if your spouse wants a divorce and your home mortgage loan is underwater. Contact Schwartz | White in Boca Raton, Florida about your case.
Source:
scholar.google.com/scholar_case?case=12719640804840528896&q=divorce+market&hl=en&as_sdt=4,10&as_ylo=2014&as_yhi=2024
