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.
