Property-asset division during a divorce

[amd64a]

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

I have a question about property/asset division during a divorce in Pennsylvania

The house was bought for 270k, with a 35k down payment. There is 233k left on the loan as of now.

Of that 35k down payment, 25k was a gift from her family to HER, and 10k was a gift from my family to ME. Each of the moneies from both of us were then transferred into our joint checking account, and then used to make the down payment in three installments as required for each step of the closing process.

The house was estimated at 250k in January, although now a house close to me is in forclosure and the house next to me just sold for dirt, dirt cheap. I am now guessing that my house may now be worth about 240k at best.

My question relates as to how (assuming the house is worth 245k as a high guess) the equity may be distributed according to this scenario.

My guess would have been (245k-233k)/2 = 6k each.



Her lawyer has also raised the issue of "vanishing credit" theory with respect to PA and our specific county of PA regarding gifted money towards a spouse.

She is asking for 50% of the equity PLUS an additional 23k (2k "vanishes" over the course of 3 years since we bought the house) since 25k was put into the house from her "gifted" money, which she is claiming was a separate and non-mariatal asset.

According to her, that would be (245k-233k)/2 = 6k + 23k = 29k for her, and me at (29k to her -10k of my "gift money -6k equity) = -13k. So I would OWE her 13,000$ after the house is sold.

Since the home has lost a substantial amount of value, does that also not figure in that the 25k gift money from her "invested" in the home is also lost as well (similar to stocks and investments)? How could she recover money that was put into a home that now has lost that value of money?

Or, does the fact that both our gift monies were "comingled" within our joint checking account remove the possibility that they are nonmariatal assets? It was only a matter of several days since each gift money was deposited and then transferred out for the down payment. there is also a long history of the mortgage payments coming from our JOINT checking account to pay for the mortgage as well. Does that not affect whatever gift money that was put into the house since marital funds were used for the mortgage as well as upkeep of the home?

 

[mistoffolees]

I would argue that everything is so thoroughly commingled as to make separation impossible - and therefore you are each entitled to 1/2 of the current equity. If you sell the house, you will find that it's probably zero (or less) since there will be selling costs.

 

[LdiJ]

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

I have a question about property/asset division during a divorce in Pennsylvania

The house was bought for 270k, with a 35k down payment. There is 233k left on the loan as of now.

Of that 35k down payment, 25k was a gift from her family to HER, and 10k was a gift from my family to ME. Each of the moneies from both of us were then transferred into our joint checking account, and then used to make the down payment in three installments as required for each step of the closing process.

The house was estimated at 250k in January, although now a house close to me is in forclosure and the house next to me just sold for dirt, dirt cheap. I am now guessing that my house may now be worth about 240k at best.

My question relates as to how (assuming the house is worth 245k as a high guess) the equity may be distributed according to this scenario.

My guess would have been (245k-233k)/2 = 6k each.



Her lawyer has also raised the issue of "vanishing credit" theory with respect to PA and our specific county of PA regarding gifted money towards a spouse.

She is asking for 50% of the equity PLUS an additional 23k (2k "vanishes" over the course of 3 years since we bought the house) since 25k was put into the house from her "gifted" money, which she is claiming was a separate and non-mariatal asset.

According to her, that would be (245k-233k)/2 = 6k + 23k = 29k for her, and me at (29k to her -10k of my "gift money -6k equity) = -13k. So I would OWE her 13,000$ after the house is sold.

Since the home has lost a substantial amount of value, does that also not figure in that the 25k gift money from her "invested" in the home is also lost as well (similar to stocks and investments)? How could she recover money that was put into a home that now has lost that value of money?

Or, does the fact that both our gift monies were "comingled" within our joint checking account remove the possibility that they are nonmariatal assets? It was only a matter of several days since each gift money was deposited and then transferred out for the down payment. there is also a long history of the mortgage payments coming from our JOINT checking account to pay for the mortgage as well. Does that not affect whatever gift money that was put into the house since marital funds were used for the mortgage as well as upkeep of the home?

I think that the reality of things is that you are going to be lucky if you don't end up with a short sale by the time that you add selling expenses into the mix. (realtor's commission and closing costs)

I think that if you end up with any proceeds being available for you and your stbx it will be quite minimal.

In my opinion the fairest division of any proceeds would be 29% you and 71% your stbx because those are the percentages of the downpayment you each provided from your separate gifts.

However, based on the reality of the situation, if I were in your shoes I would be tempted to just state that my stbx would get any proceeds that resulted from the sale of the house...because bottom line, its unlikely to be more than a few thousand, if any.

After all, if you both spend several thousand in attorney fees fighting this issue, and then end up with only a couple of thousand of proceeds after the house sells, then you both threw good money after bad.

 

[amd64a]

Well, the goal was to buy her out of the house, assuming I could get a refinance of the mortgage. With the Homeowner Assistance loan programs, I can get a refinance for up to 95% of what is owed on the house.

To date, I have made all mortgage payments solely since August, and can continue to do so. I was told that I could claim credit for her half of the mortgage payments that she should have made.

I have also put a good deal of time into fixing up the house, such as replacing a drop ceiling, sanding and refinishing a very large deck, painting, and a few other projects. There are also student loans that I took out during graduate school, that were directly used to pay for marital expenses, and I have documentation of this. I am also claiming half the value of her car titled only in her name since almost all of the 5 years of payments were made out of our joint account.

All in all I had planned to get an appraisal for a refinance, and submit that value to her. But she will not sign a quitclaim deed without CASH in hand no less than 25,000$.

I am very worried that ultimately I will have to sell the house, and a buyer will simply not pay what it is worth, and we will end up making nothing.

I am very, very worried after that, the judge will tell me I still owe her 25,000$ of her gift money, DESPITE neither of us getting any equity out of the sale. That is, I still will have to pay her 25k back no matter whether the home is sold for equal value, or even underwater and we both incur debt.

 

[LdiJ]

Well, the goal was to buy her out of the house, assuming I could get a refinance of the mortgage. With the Homeowner Assistance loan programs, I can get a refinance for up to 95% of what is owed on the house.

To date, I have made all mortgage payments solely since August, and can continue to do so. I was told that I could claim credit for her half of the mortgage payments that she should have made.

I have also put a good deal of time into fixing up the house, such as replacing a drop ceiling, sanding and refinishing a very large deck, painting, and a few other projects. There are also student loans that I took out during graduate school, that were directly used to pay for marital expenses, and I have documentation of this. I am also claiming half the value of her car titled only in her name since almost all of the 5 years of payments were made out of our joint account.

All in all I had planned to get an appraisal for a refinance, and submit that value to her. But she will not sign a quitclaim deed without CASH in hand no less than 25,000$.

I am very worried that ultimately I will have to sell the house, and a buyer will simply not pay what it is worth, and we will end up making nothing.

I am very, very worried after that, the judge will tell me I still owe her 25,000$ of her gift money, DESPITE neither of us getting any equity out of the sale. That is, I still will have to pay her 25k back no matter whether the home is sold for equal value, or even underwater and we both incur debt.

The bolded definitely won't happen.

However you may be forced to sell the house...or to spend the money to take things in front of a judge, and hope that the judge orders differently.