Loan & Property Title Before & Aft Marriage

[betty7755]

What is the name of your state (only U.S. law)? CA
My husband bought a condo before we were married. Only his name was on the title. He took an equity line of credit loan out on the condo. Subsequent to this loan, my name was placed on the title. He then used funds from this now community property to pay off his equity loan. Can he do that? Am I now responsible for the loan?What is the name of your state (only U.S. law)?

[Ohiogal]

Originally Posted by betty7755

What is the name of your state (only U.S. law)? CA
My husband bought a condo before we were married. Only his name was on the title. He took an equity line of credit loan out on the condo. Subsequent to this loan, my name was placed on the title. He then used funds from this now community property to pay off his equity loan. Can he do that? Am I now responsible for the loan?What is the name of your state (only U.S. law)?

He used the funds from the equity line of credit to pay off the equity line of credit?

Did you sign the loan papers?

[LdiJ]

Originally Posted by Ohiogal

He used the funds from the equity line of credit to pay off the equity line of credit?

Did you sign the loan papers?

I have read it through three times, and I am not at all sure that I undertand what she means.

[Ohiogal]

Originally Posted by LdiJ

I have read it through three times, and I am not at all sure that I undertand what she means.

I have no clue. I kept reading and got more confused. I kept reading that he used the line of credit to pay off the line of credit. Which makes no sense.

[betty7755]

Sorry for the confusion. Unfortunately it is complicated. I'll try again: Before marriage, husband buys condo. Only his name is on the title. After marriage, husband gets a line of equity on this condo that is still only in his name. AFTER the loan is approved, wife's name goes on the title. The condo is a rental. It is producing rental income. This income is being used to pay off equity line of credit taken out BEFORE wife's name went on title. Wife never signed loan documents for equity line of credit. Is wife responsible for loan? Is rental income community property? If so, can that community property be used to pay off line of equity? I'm not sure it this is much more clear. As noted it is complicated, sorry. Thank you

[LdiJ]

Originally Posted by betty7755

Sorry for the confusion. Unfortunately it is complicated. I'll try again: Before marriage, husband buys condo. Only his name is on the title. After marriage, husband gets a line of equity on this condo that is still only in his name. AFTER the loan is approved, wife's name goes on the title. The condo is a rental. It is producing rental income. This income is being used to pay off equity line of credit taken out BEFORE wife's name went on title. Wife never signed loan documents for equity line of credit. Is wife responsible for loan? Is rental income community property? If so, can that community property be used to pay off line of equity? I'm not sure it this is much more clear. As noted it is complicated, sorry. Thank you

Yes, that is much clearer.

From purely a credit/financial perspective only the husband is responsible for the equity line, because only husband's name is on that loan. Creditors are not parties to divorces and they are bound only by the original loan agreements.

The wife however is an equal owner of the property and would be entitled to an equal share of any equity in the property in a divorce...assuming that there is any equity.

If a divorce is pending, as equal partners in the property, it would be appropriate for any rental income to go towards the mortgage, expenses, and equity loan before being distributed to the "partners"...even if the loans are only in the name of one of the "partners".

If the husband ends up keeping the property in a divorce, then the equity loan would be totally his responsibility, assuming that the proceeds of the equity loan did not retire other marital debts, or didn't cover an investment in other marital property. If it did, then that should be factored into the overall marital property settlement.

[betty7755]

Thanks,
This was VERY helpful!