# Who gets house profit?



## Hopelessus (Oct 29, 2014)

We need to sell the house because he doesn't want to pay the mortgage and I can't get my own for the house because my yearly salary is too low. When we bought the house he took out a home equity loan from his other house (46,000). We bought at 469,000 and its work about 410,00. Problem: When the house sells he wants the first 46,000 profit and we can split any remaining profit after lawyers and closing costs. That was scenario one put on the table. This is scenario two. He said he would split the first 20,000 if there is that profit. I would get 10,000, he would get 10,000. If it goes anywhere over 20,000 the remaining profit will go to him.

My name is on the deed and mortgage. I work full time and bring in 44,000 gross, while he brings in 120,000, big difference.

Is it legal for him to take that 46,000 out of the profit rather then splitting the entire profit?


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## EVG39 (Jun 4, 2015)

What does your lawyer say?


Sent from my iPhone using Tapatalk


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## happy2gether (Dec 6, 2015)

personally I would not agree to either option. you should flat out get half of the profit, him getting "his" money back is not in your best interest. Since both of you are on the deed then both of you MUST sign off on any sale. Let the lawyer tell him where to stick his proposal.


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## Bananapeel (May 4, 2015)

Laws vary by state and what assets each of you individually brought into the marriage. Keep in mind that what the law says isn't always the fair thing to do. IMO the fair thing to do is pay back his investment and then split the remaining profit. The reason is three fold. First if he never made the investment there wouldn't be any profit to split. Second if it was his money (i.e. his pre-marital asset) and he didn't gift it to you, then it remains his. Thirdly, he took a risk with the investment. Specifically, think about what you'd do if the house lost money and he couldn't recover that $46K investment. Would you feel obligated to pay back your share of it or would you expect it to be his loss?


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## jb02157 (Apr 16, 2014)

If there is any profit from selling the house, it's split 50/50, noone gets more than the other irregardless of who contributed more of the down payment or the monthly payments. Unfair if you ask me, but that's what happens.


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## Pluto2 (Aug 17, 2011)

How long were your married and when did you buy the house? It matters. Is the other house separate property or is a portion of its value subject to equitable distribution, like the appreciation during marriage. Were marital funds used to service the home equity loan?

If his other house was indeed separate property, then a portion of the separate property was commingled with marital property. Whether it is still separate property or marital property is a complicated issue we can't answer.


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## unbelievable (Aug 20, 2010)

Separate property is defined under DRL 236 B(1)(d) as the following:
property acquired before the marriage
property acquired by bequest, devise, descent (i.e., an inheritance)
gifts to one spouse from anyone other than the other spouse. However, it is often disputed whether a gift was to one or both spouses, the latter making it marital property.
compensation for personal injury cases, but only that part which constitutes punitive damages and pain and suffering.
separate property acquired in exchange for separate property.
appreciation of separate property will be considered separate property if the non titled spouse did contribute towards the appreciation.
property designated as separate by a validly executed marital agreement as defined in DRL 236 B(3).

Equitable Distribution of Marital Property in a New York Divorce - Domestic Relations Law 236B DRL 236 B

If the house was bought for $469K and it's now worth $410K, that sounds like a loss of at least $59K. The $46K deposit was in the form of a loan so that's not profit but a liability. If that loan was based on equity in "his" house, that equity was wealth he had before the marriage (separate property). If you did not help earn that $46K equity in his former home and it was acquired when he was married to another or single, why would you believe you should receive any part of it? What was your marital status when your current home was acquired?


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## michzz (Jun 6, 2008)

If the $46K was considered an investment, then he is not asking to split the profits, he is asking to get his investment back and to then split the remaining profits.

But, if the money was commingled with the community assets, he is out of luck.


Have you two considered another angle?

Renting out the house?

Or letting you pay the mortgage payments and continue living there?


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## Sun Catcher (Dec 6, 2013)

Would you want the $46,000 back had it been YOUR premarital asset? I certainly would. I don't know the divorce laws, but I do know fair is fair. What you gain/earn during the marriage, no matter if one earns more than the other, should be split equally, but not any assets owned prior to the marriage. 

Don't be greedy, the 46,000 he put down is his since the marriage has not worked out.


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## anonmd (Oct 23, 2014)

Look up profit, there is none. Seems like the real question is who will write the check to pay the realtor commission and the bank?


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## Lostme (Nov 14, 2014)

If letting him have that money will make getting out easier and it lets you have more of the things you want, then I would consider it but on your terms not his.

Like let him have the money up to the $46,000 you split the money after that, and as long as it is not one of his family heirlooms give him a list of things you want from the residence and so forth.

I don't know what your your full situation is to even know if the above will work.

Good luck


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## Hopelessus (Oct 29, 2014)

His other house was acquired before the marriage which I also lived in and paid things like grocery bills, car loans, etc. The "newer" house was purchased 9 years ago, while we were married. The "newer" house has both of our names on the mortgage and deed. I am not on the deed, mortgage or home equity loan of "his" other house. He took the home equity loan out of "his" house he bought before we were married. The mortgage, deed and home equity loan are in HIS name only. We are still going through the divorce process. This is a big issue right now.


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## Hopelessus (Oct 29, 2014)

He used the home equity loan as a down payment on our current home.


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## Hopelessus (Oct 29, 2014)

I would love to stay in the house with my kids. Both of our names are on the mortgage and deed. But if his name comes off the mortgage, I will not be approved for another mortgage because my income is too low. Even though I would get some income on the house, enough to pay monthly mortgage, I still cant get approved for a mortgage.


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## Hopelessus (Oct 29, 2014)

The lawyers arent any help. They are looking out for their pockets in this one. I have received absolutely no guidance on this matter.


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## Hopelessus (Oct 29, 2014)

Why is that the priority over a 50/50 split of any profit?


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## Bananapeel (May 4, 2015)

Hopelessus said:


> His other house was acquired before the marriage which I also lived in and paid things like grocery bills, car loans, etc. The "newer" house was purchased 9 years ago, while we were married. The "newer" house has both of our names on the mortgage and deed. I am not on the deed, mortgage or home equity loan of "his" other house. He took the home equity loan out of "his" house he bought before we were married. The mortgage, deed and home equity loan are in HIS name only. We are still going through the divorce process. This is a big issue right now.


In my state the down payment would not have then been counted as a marital asset since it came from his sole property prior to the marriage and he'd get that back when the house sold. Any other money after the house is sold and closing costs/expenses are paid would be split evenly unless there was a prenup that said otherwise. Unfortunately, paying normal monthly expenses like the grocery bills and car loans won't change the first house as a premarital asset, at least in my state. 

It sounds like he already offered to split the remaining money after his down payment is returned, which really seems pretty reasonable. I'd keep this issue away from the lawyers (there are much better ways to spend $300/hr IMO) if you also understand and agree that his offer is reasonable.


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## Hopelessus (Oct 29, 2014)

If the investment was a loss for him, wouldn't it stand true that all stock market investors demand their money back after they lose profit or don't gain? I am not sure if that's correct, but it sure sounds like it. I didn't force his hand to sign those papers. He gave $46,000 of his money to "US", not just him. To our marriage investment.


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## Married but Happy (Aug 13, 2013)

OP, you may be right. He took money from his previously owned house to put into the house you both own. While it would be FAIR to reimburse his down payment and then split any additional profits, the actual result may depend on your state's laws. He did not keep the down payment separate - he mingled his funds and yours, which in many places creates the presumption of a joint asset. You may legally be able to obtain half of ALL the profit, but morally you are not entitled to them, IMO.


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## Bananapeel (May 4, 2015)

Hopelessus said:


> I would love to stay in the house with my kids. Both of our names are on the mortgage and deed. But if his name comes off the mortgage, I will not be approved for another mortgage because my income is too low. Even though I would get some income on the house, enough to pay monthly mortgage, I still cant get approved for a mortgage.


His name can come off the deed but not the mortgage. The only real way to get someone's name off a mortgage is to refinance the loan without him or sell the house. A bank won't just remove someone's name from a mortgage loan because it doesn't benefit them in any way.


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## anonmd (Oct 23, 2014)

Let's review what I think the facts are you provided:

Original purchase price = $469,000
Down Payment = $46,000 <-----This came from "his home equity loan" 
Implied loan at the start $423,000
Current balance after
9 years of 108 payments $357,719<---- assumed 30 year term, 5.25% rate


Current value per you= $410,000
Less: Realtor commission (20,500)
Less: Loan balance (357,700)
Net Proceeds from sale $31,800<----- This is cash not "profit"

Less: Orig. down payment (46,000)
LOSS on sale= ($14,200)<------THIS is the profit or in this case (LOSS) on the deal.

Now, if there are other marital assets involved you may be able trade off your claim on those against getting more of the cash from the house but if the house is the sole asset in an equitable distribution state you will split the loss and owe $7,200 to him. 

Hint - his salary is substantial, chances are there are some significant pension or 401K balances and you would have a claim on 1/2 the contributions and some of the earnings since marriage.


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## anonmd (Oct 23, 2014)

Married but Happy said:


> OP, you may be right. He took money from his previously owned house to put into the house you both own. While it would be FAIR to reimburse his down payment and then split any additional profits, the actual result may depend on your state's laws. He did not keep the down payment separate - he mingled his funds and yours, which in many places creates the presumption of a joint asset. You may legally be able to obtain half of ALL the profit, but morally you are not entitled to them, IMO.



There is no profit. People, stop calling it profit. Maybe the 46K counts as a gift and is therefore joint but in any case, the cash coming out of this deal is NOT profit.


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## Bananapeel (May 4, 2015)

Hopelessus said:


> If the investment was a loss for him, wouldn't it stand true that all stock market investors demand their money back after they lose profit or don't gain? I am not sure if that's correct, but it sure sounds like it. I didn't force his hand to sign those papers. He gave $46,000 of his money to "US", not just him. To our marriage investment.


In my state using his asset like that is not counted as comingling or a gift to the marriage (unless you have documentation that says otherwise). I know you want it to be, but that's just not how it works where I live. The good thing is any equity you two built up by paying the mortgage for those 9 years would be counted as a marital asset that would be split after his $46K is returned. 

Basically it goes like this. Each of your premarital assets that haven't been comingled get returned to each of you as the first priority. Everything else that you acquired during the marriage is split evenly.


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## Hopelessus (Oct 29, 2014)

Exactly refinance. Then he doesn't want his name on the deed or mortgage. Great. But when I need to fill out the paperwork I will not be able to qualify for a new mortgage. At least that's what the banks tell me.


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## Hopelessus (Oct 29, 2014)

You're right its not a profit until after $46,000 is deducted from the profit and all closing costs are deducted for any profit , that's to say there will be a profit after the $46,000 is deducted or any money that is left.


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## Bananapeel (May 4, 2015)

anonmd said:


> Let's review what I think the facts are you provided:
> 
> Original purchase price = $469,000
> Down Payment = $46,000 <-----This came from "his home equity loan"
> ...


I'm hoping it was a 15 year loan at 3% APR!


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## Bananapeel (May 4, 2015)

Hopelessus said:


> Exactly refinance. Then he doesn't want his name on the deed or mortgage. Great. But when I need to fill out the paperwork I will not be able to qualify for a new mortgage. At least that's what the banks tell me.


Could you get a co-signer? Maybe your parents?


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## Hopelessus (Oct 29, 2014)

Thank you. That pretty much sums it up. I hope it does sell for more then $410,000..the neighborhood has changed so it dropped prices.


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## brooklynAnn (Jun 29, 2015)

Just because you paid bills such as car or food or gas it's not your house. That house was in his name prior to meeting you and marrying you. You did not contribute to buy or to increase the value. So, in my state of NY you are not entitled to it because it was never a co-mingle assets.

Now, he took 40 something thousand of equity from house 1 and put into a new house(2) with both of your names, still does not make h 1 a co-mingled asset. 

Now, if he state that the 46 thousand was a loan, then upon selling of H2 he is expecting to get repaid. If not and the funds was just put into H2 then, it co-migled and you both share equally in the sales proceeds.

Sounds like you really want that. Does he still have the home equity loan on h1? because who do you expect to pay for that? The house fairy. 

Also, how do you have the rest of your money. Does he have his personal account and do you have yours? Is monies kept in joint account?


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## Kivlor (Oct 27, 2015)

Hopelessus said:


> If the investment was a loss for him, wouldn't it stand true that all stock market investors demand their money back after they lose profit or don't gain? I am not sure if that's correct, but it sure sounds like it. I didn't force his hand to sign those papers. He gave $46,000 of his money to "US", not just him. To our marriage investment.


This completely depends on your jurisdiction. Your attorney should know. If he doesn't give you an answer, spell it out for him: "I. Need. To. Know. Is. This. Marital. Equity. Or. Not. Yes or no?"

Because your H borrowed money for this, he may very well be able to claim his $46,000 back. It would be less likely if he had just used $46,000 he had laying around, or if he'd sold something to do it.

From an ethical standpoint, I would find it quite repulsive to expect your H to be straddled with the debt on his other property, and yet you want to claim the equity the debt was borrowed against as your own. Nothing just or fair in that, IMO.


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## Hopelessus (Oct 29, 2014)

I did quickly mention it to them, but even their combined yearly income doesn't help put it over $100,000. They could live there and pay rent to help pay mortgage, but still does not help get mortgage. Thanks


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## C3156 (Jun 13, 2012)

Hopelessus said:


> Exactly refinance. Then he doesn't want his name on the deed or mortgage. Great. But when I need to fill out the paperwork I will not be able to qualify for a new mortgage. At least that's what the banks tell me.


I am not trying to sound mean, but have you run the numbers on this? You can't afford this house.

Home value (you) - $410,000
Down payment - $10,000 (Assume you go with deal #2)

Total loan - $400,000
Interest Rate: 3.50% (I'm being very liberal)
Monthly payment - $2,346.18 (including escrow, 30 yr fixed)

Your income - $44,000 (gross) / $35200 (net, rough) / $1,353.85 bi-weekly


That's like 86% of your take home pay. Of course your bank will not refinance your loan, you simply cannot afford it. I hate to tell you, you would be best served to sell the home and find something more affordable.

As for the division of property, it really depends on how your state views the comingling of funds. One thing I will tell you is that if the two of you can reach an agreement without going to court, it will save you a lot of money. You have already figured out that lawyers are just out for money, do without them as much as possible.


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## Bananapeel (May 4, 2015)

By the way, in case this hasn't been mentioned yet it isn't really the whole $46K that he should be entitled to. Presumably you've been paying down his $46K loan over the past 9 years using marital assets. So the $46K really is just whatever amount that loan balance is. For example, if you've paid $10K down on that $46K loan through marital assets, then he only gets $36K back from the house sale since he already has taken in $10K.


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## Kivlor (Oct 27, 2015)

Bananapeel said:


> By the way, in case this hasn't been mentioned yet it isn't really the whole $46K that he should be entitled to. Presumably you've been paying down his $46K loan over the past 9 years using marital assets. So the $46K really is just whatever amount that loan balance is. For example, if you've paid $10K down on that $46K loan through marital assets, then he only gets $36K back from the house sale since he already has taken in $10K.


Depends. If the other house collects rent, and that rent is used to pay off the debt, then the whole 46K could be up for grabs. Good point though.


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## MJJEAN (Jun 26, 2015)

Hopelessus said:


> Thank you. That pretty much sums it up. I hope it does sell for more then $410,000..the neighborhood has changed so it dropped prices.


Banks won't mortgage a property for more than it's appraised value, generally. So, at best, you'd get the $410,000.00 appraised value. However, buyers usually offer less than appraised value if they can get away with it. Unless the neighborhood is hot and there is a bidding war, you're probably looking at selling for market value or a bit less.


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## Kivlor (Oct 27, 2015)

OP I would expect to negotiate down from the "Market Value". But I don't sell residential real estate, I only work on the commercial side, so take my comment with a grain of salt.

My guess is that you will be selling the house for ~$390,000. Which means they will be taking a significant loss. It's possible that if you H's contribution is not considered a marital asset that you will see no cash from the sale of the house. If it sells low enough, you may be paying your H for the loss.


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## Malpheous (May 3, 2013)

If the house was bought during the course of the marriage, then in most states the money either party puts into it is considered marital and mixed. Doesn't matter the source after the seal is broken. 

Original house(pre-marriage) - Money from that is his. 

New house(post-marriage) - Marital asset.

Money from any source, to include original house, that has been mingled is mingled and marital. If he sold the house for 200k(example) and put the funds into a retirement. Half is yours. Savings? Half is yours. Savings in his name only, his, all his.

So... If the 46k went to house you purchase together with both names on it, it's marital as the whole. Almost always. If you ever signed a quit claim deed, etc, it can change that.

If the 2nd house was also pre-marital, then you are entitled to 50% of any equity generated, minus initial investments. If there is negative equity(loss) you are liable for 50% of that. Two-way street. My ex learned that when she wanted her half of the house she lived in for a whopping 2 months that was in the red.


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