Community Property Seperation

[jrb1681]

What is the name of your state (only U.S. law)? LA

I've been divorced for almost three years. The house was left in my care, but the mortgage is under both my name and my former spouse. It was never refinanced, but I've paid all the notes since she left. I've decided to sale the house. Is she still entitled to half of the profits or is it pro-rated from when she left the payments to me alone.

 

[nextwife]

What does your divorce decree state?

 

[jrb1681]

There is nothing in the divorce decree about the house. It was left as a letter from her attorney to mine stating that I could keep the house if I had her name removed/refinanced. I was never able to do this because she wouldn't sign the necessary paperwork from the mortgage company.

So I stayed at the house and paid the notes ( divorce was finalized in Feb 07). I recently decided to sell and found a buyer, but when i contacted her to sign the contract(seller) I learned she hired a new attorney to seperate the community property.

I'm just curious. If they eventually agree to terms already established, is she entitled to the whole half or just the equitible amount according to when I took over the house.

 

[mistoffolees]

There is nothing in the divorce decree about the house. It was left as a letter from her attorney to mine stating that I could keep the house if I had her name removed/refinanced. I was never able to do this because she wouldn't sign the necessary paperwork from the mortgage company.

So I stayed at the house and paid the notes ( divorce was finalized in Feb 07). I recently decided to sell and found a buyer, but when i contacted her to sign the contract(seller) I learned she hired a new attorney to seperate the community property.

I'm just curious. If they eventually agree to terms already established, is she entitled to the whole half or just the equitible amount according to when I took over the house.

There are a lot of issues wrapped up here.

The divorce decree doesn't mention the house, so they can bring it up at any time. OTOH, you have a letter from her attorney saying you can keep the house.

I would argue that the letter from her attorney is essentially a quit claim and that they have no interest in the house at all. However, you're going to need her signature to sell it, so you're probably going to have to go back to court to force the issue.

Her argument will be that the divorce decree doesn't mention it, so she is free to open the property settlement at any time - particularly since you didn't refinance (you will have to argue that she refused to sign the papers when you tried to refinance, so dig through your files and find your refinance application as evidence).

The judge will have to decide. I know what I'd do if it were me, but that doesn't help. In any event, the worst case is that the judge reopens the property settlement and says that she was entitled to half of the equity in the house at the time of the divorce. You would then calculate how much that equity would have changed during the intervening years. HOWEVER, she could only claim the change in her share in the equity. She could not claim the equity gained from reducing the principal value of the loan since you paid that all yourself. So how much equity was there in the house at the time of the divorce? I would imagine that the current equity value is about the same or maybe less, so she would claim half the equity at the time of divorce.

 

[LdiJ]

There are a lot of issues wrapped up here.

The divorce decree doesn't mention the house, so they can bring it up at any time. OTOH, you have a letter from her attorney saying you can keep the house.

I would argue that the letter from her attorney is essentially a quit claim and that they have no interest in the house at all. However, you're going to need her signature to sell it, so you're probably going to have to go back to court to force the issue.

Her argument will be that the divorce decree doesn't mention it, so she is free to open the property settlement at any time - particularly since you didn't refinance (you will have to argue that she refused to sign the papers when you tried to refinance, so dig through your files and find your refinance application as evidence).

The judge will have to decide. I know what I'd do if it were me, but that doesn't help. In any event, the worst case is that the judge reopens the property settlement and says that she was entitled to half of the equity in the house at the time of the divorce. You would then calculate how much that equity would have changed during the intervening years. HOWEVER, she could only claim the change in her share in the equity. She could not claim the equity gained from reducing the principal value of the loan since you paid that all yourself. So how much equity was there in the house at the time of the divorce? I would imagine that the current equity value is about the same or maybe less, so she would claim half the equity at the time of divorce.

If the letter from the attorney was written prior to the divorce being settled and final, then I think it would be argued that it was part of negotiations, rather than any kind of "contract".

It certainly couldn't be argued to be a "quit claim". I cannot see a title company being willing to ensure a title with a letter from an attorney.

 

[mistoffolees]

If the letter from the attorney was written prior to the divorce being settled and final, then I think it would be argued that it was part of negotiations, rather than any kind of "contract".

Absolutely. My statement only applies if it was signed after the divorce was final. If it was signed before the divorce was final, it's worthless.

It certainly couldn't be argued to be a "quit claim". I cannot see a title company being willing to ensure a title with a letter from an attorney.

I wasn't suggesting that it was a formal quit claim. Rather, I was suggesting that it might be considered to be the equivalent - at least as far as she was concerned. That is, it might be sufficient to preclude her from asserting any right to the equity at a later date. She would still have to sign the sales documents (or he would have to get a court order saying the house could be sold without her signature).

 

[jrb1681]

Thanks for the info!

I believe that she will be advised by her new attorney to agree to the terms that I have already negotiated.

I just wanted a little peace of mind, in regard to how much claim on equity she has.

 

[sroutlaw]

OP - The crucial issue will be, when was this letter written, regarding the house? If it was prior to (or ON) the divorce date, it will not be considered, since it is parol evidence.