Division of property

[aubtig77]

What is the name of your state? Georgia

I bought a house for way below market before I got married. Worth more than 50k more than i paid. Since we have been married, we paid down 17k, but took an equity loan to pay off debt, which leaves us with 6k equity built up while together. If we divorce, how much would she be entitled to? All of it, or just the equity we built up together? Also, house is in my name. Also, if I sold and bought a new house with no equity while we are separated, what would happen then? I make 3 times what she makes if that matters.

 

[LdiJ]

What is the name of your state? Georgia

I bought a house for way below market before I got married. Worth more than 50k more than i paid. Since we have been married, we paid down 17k, but took an equity loan to pay off debt, which leaves us with 6k equity built up while together. If we divorce, how much would she be entitled to? All of it, or just the equity we built up together? Also, house is in my name. Also, if I sold and bought a new house with no equity while we are separated, what would happen then? I make 3 times what she makes if that matters.

In whose name(s) is/are the equity loan?

 

[aubtig77]

Equity and house are both in my name. Used equity loan to pay off our credit card debt

 

[LdiJ]

Equity and house are both in my name. Used equity loan to pay off our credit card debt

Well, that simplifies things a bit. Most likely the marital equity would be the equity that accrued during the marriage. Since you pulled out marital equity to pay marital debt, then that would reduce the equity accrued during the marriage. However, that is assuming that the money covered marital debt. If you had premarital debt included in the credit card payoffs then that might change the picture.

 

[Litigator22]

What is the name of your state? Georgia

I bought a house for way below market before I got married. Worth more than 50k more than i paid. Since we have been married, we paid down 17k, but took an equity loan to pay off debt, which leaves us with 6k equity built up while together. If we divorce, how much would she be entitled to? All of it, or just the equity we built up together? Also, house is in my name. Also, if I sold and bought a new house with no equity while we are separated, what would happen then? I make 3 times what she makes if that matters.

Your statement that "since the marriage we have paid down 17k" is puzzling inasmuch as you claim to have made the purchase pre-marriage. (Did you have a separate agreement with the seller to defer a "down payment"?) Whatever, it certain adds difficulty in defining what you mean by "the equity we built up while together". Are you excluding or including any appreciation in market value? Has the property been physically improved in any significant way?

Anyway, as you already know Georgia is an equitable division state wherein in a divorce the marital property is subject to an equitable division; whereas, in principal non-marital assets retain their separate ownership status. Which seems simple enough expect for the fact that there are circumstances and conditions frequently occurring and arising during the marriage that often blur the distinction and what may once have been strictly regarded as a spouse's sole and separate property can be transmuted into marital or subject to a marital interest or lien.

Nobody not even the lawyers involved can accurately predict how a family court would treat the various financial transactions as affecting the status of the house; there are no formulae or guidelines. But my guess is that you have dangerously clouded the issue.

Regarding your what if question: (1) If you are married you are married. Period. (2) With her on various loan documents you may have some difficulty conveying merchantable title to the house without her signature. (3) The income discrepancy would be inconsequential

 

[aubtig77]

I got a mortgage on the house for 104. Appraisal value was 175. I bought it over a year before we married. Got it through foreclosure sale. No significant improvements to the house. While we have been married, I owe 17k less than what I bought it for. I took an equity loan on the house that was used to pay credit card debt she had and I had before marriage. Nothing is or has ever been in her name. I am the sole borrower on the mortgage and equity loan. Again, I got the mortgage when I was single. I got the equity while married, but it like the mortgage was only signed by me.

 

[LdiJ]

I got a mortgage on the house for 104. Appraisal value was 175. I bought it over a year before we married. Got it through foreclosure sale. No significant improvements to the house. While we have been married, I owe 17k less than what I bought it for. I took an equity loan on the house that was used to pay credit card debt she had and I had before marriage. Nothing is or has ever been in her name. I am the sole borrower on the mortgage and equity loan. Again, I got the mortgage when I was single. I got the equity while married, but it like the mortgage was only signed by me.

I understood what you meant by 17k in equity happening during the marriage. I think its a bit odd that the other poster didn't get that. Now that you have indicated that the debt that the equity loan covered was premarital debt for both of you, that gets a little murkier. Basically, the amount of her premarital debt that you paid for with the home equity loan was a gift to her and the equity accrued during the marriage probably still stands as a result. I know that is not what you would want to hear, and you probably should consult a local attorney to verify.

 

[not2cleverRed]

I understood what you meant by 17k in equity happening during the marriage. I think its a bit odd that the other poster didn't get that. Now that you have indicated that the debt that the equity loan covered was premarital debt for both of you, that gets a little murkier. Basically, the amount of her premarital debt that you paid for with the home equity loan was a gift to her and the equity accrued during the marriage probably still stands as a result. I know that is not what you would want to hear, and you probably should consult a local attorney to verify.

I suspect that the ambiguity is that some people think they "own" a house even though they have a mortgage, while other people think that you really only "own" a house if it is completely paid for. If the house were completely paid for prior to the marriage, then it would arguably be separate property.

OP thinks that equity has increased by $17K because that is the amount the mortgage was paid down. As Litigator is pointing out, that is now exactly how it works: the fair market value and any changes to that during the marriage have to be taken into account - which OP has not. The fair market value of the house when they married (A) (<-- not what OP bought it for a year before), the fair market value of the house now (B), and what is still owed on the house are more necessary data points (C).

The equity loan is a marital debt: they muddied the water, and their separate debt has become marital. Once it becomes so muddied, trying to untangle it is more expensive than just accepting that.