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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 06-13-2007, 08:56 PM
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Default Matrimonial Home

My husband owned the matrimonial home before we were married and my name was added to the deed. Since he naturally wants to keep it, he plans to buy me out. When I completed my Financial Statement, I included an estimation of my share of the value of the matrimonial home on the separation date (which was two years ago) and today in Part 7(a) and deducted my share of the mortgage in Part 8. My husband is obtaining two appraisals for the house (its value on the separation date and its value today). Now for the questions.

1. Which date do we use for the valuation of the home, because I assume that it has increased substantially in value in the past two years. I have not paid anything towards the house since I moved out, but I have paid him nominal spousal support because I'm earning more than he is.

2. When it comes to my husband buying me out, is the mortgage deducted from the value of the home to arrive at a buyout price even though it has already been deducted on the Financial Statement? For example, if we use the separation date and the home was worth $325,000 and the mortgage was $150,000, would he owe me $162,500 or $87,500.

3. Are real estate fees also deducted from the value of the home if he is buying me out? At 6%, they would be $19,500. How about legal fees?

Thanks.

Linda
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Old 06-14-2007, 09:37 AM
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Quote:
Originally Posted by Linjohn
1. Which date do we use for the valuation of the home, because
I think it is the value at separation as you have not contributed to the value of the home since then.

Quote:
Originally Posted by linjohn
if we use the separation date and the home was worth $325,000 and the mortgage was $150,000, would he owe me $162,500 or $87,500.
Although you are entitled to half the value for a buy out, you would equally be responsible for half the debt as well.
So if the home was appraised at $325,000 at separation with a mortgage of $150,000, then half of the appraised amount is $162,500 less half the remaining debt ($162,500 - $75,000) is $87,500. So this should be the amount he pays you for a buy out. Just my opinion.

BUT!! Remember if he owned the home prior to your marriage and you were added after the fact, then he has grounds to claim only the appreciation in value during marriage/co-habitation.

The above example of $87, 500 is if you both bought the home after marriage and contributed to it’s appreciation value since the purchase. So he may have an estimate of the value at the time you moved in or became part owner, and if he does then he would deduct this amount from the appraised amount prior to any split of equity or debt. This could get financially sticky.
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Old 06-14-2007, 11:45 AM
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FL:

Thanks very much for your response.

I realize that I am only entitled to half of the increase in the matrimonial home's value during the marriage, but would the fact that I have been paying him spousal support be considered a contribution towards the home since the separation date?

My husband and I are trying to work things out without involving lawyers and have downloaded the Financial Statements from the internet in order to arrive at an equalization payment. Since the value of the matrimoniall home and the mortgage are both included in the equalization process, we aren't sure if the home is dealt with separately when we're trying to determine the buyout figure.

Linda
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Old 06-14-2007, 02:07 PM
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Quote:
Originally Posted by Linjohn
would the fact that I have been paying him spousal support be considered a contribution towards the home since the separation date?
SS is a completely separate issue, and is intended for situations where one party cannot "completely" financially support themselves after a separation. It is not an automatic thing, nor do all separations involve an issuance of SS.

The one party has to have grounds for support, not simply because one side earns more than the other and equalization is requested by the lesser earner. If the lesser earner can adequately support themselves financially then they may not qualify for SS.

I realize you are doing this out of court, but had this been dealt with by a family law judge the requesting party would have to show financial hardship as a result of the separation and that at some level the higher earner was supporting them during the marriage/co-habitation because they could not do so by themselves and that both parties were in agreement to the living arrangement either directly via written/verbal agreement or indirectly by actions.

I feel that SS is in no way associated to a buy out amount or entitlement. It is an issue in and of itself. May I be so bold as to ask why, other than you having the higher income, you are paying SS? Do you have children which now reside with him? Does he have an impediment that keeps him from earning at a higher rate or equivalent disability? You mentioned that the payment was “nominal” which would suggest that there is very little difference in your incomes.
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Old 06-14-2007, 04:21 PM
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FL:

Of course you can be so bold as to ask <G>. I'm the one who ended the relationship and moved out. I am paying my husband SS (there is no formal agreement) because he was laid off from his job shortly after we separated, and I was earning a lot more than him during the marriage. I agreed to pay him SS after his EI ran out. He had investments and money in the bank that he is now using for income and is paying all of the house-related expenses out of those funds. There are no children. If we can't come to an agreement and the case ends up in court, I want it to appear that I am being fair.

We can't reach an agreement on what date to use for the valuation of the matrimonial home. He wants to use the separation date because I haven't paid half of the house expenses, so I want to know if my spousal support payments (although voluntary) can be considered as me contributing to the house expenses and we should use the current date for the valuation.

We probably should have drawn up a separation agreement two years ago, but we parted friends and there was always a chance that we might reconcile, so we didn't want to jump the gun. That didn't happen.

Thanks for your opinion. I've been searching the internet to see if I can locate some sort of precedent but, so far, I've come up empty. Naturally, it will be to his benefit to use the separation date as the valuation/buyout date, and it will be to my benefit to use the current date.

Linda
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Old 06-20-2007, 07:40 PM
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Am I safe in assuming nobody can answer my question? My STBX and I were hoping that we could settle things ourselves, but the valuation date for the house is a stumbling block (he wants to use the value on the separation date and I want to use the current date), so I guess we'll have to consult a lawyer.

Linda
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Old 06-22-2007, 09:23 AM
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Default Possible compromise?

Just a suggestion, but maybe you could agree to split the difference?

Since it has been 2 years, maybe use the valuation as at separation plus 1 year.

Good luck
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Old 06-25-2007, 12:33 PM
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First off, it appears you've been acting in a fair and civil manner in all this. I know there are others out there who wish they could be so lucky!

As for the buy out value of the home... my opinion is:
Since the split two years ago you have not made any direct payment toward the mortgage I believe your ex has a valid point regarding the valuation date. Since he has carried the mortgage it would only be fair to use the value of the home at separation as well as the mortgage amount at the time of separation. (Then again "fairness" and "deserve" have nothing to do with Family Law).

I don't think your voluntary SS would have anything to do with the division of assets, mind you I could be wrong. However I do think a small comprimise on his part may be in order since you have provided assistance after he was laid off. Has the value of the home changed that much in two years? Is it worth the lawyer fees and the possibility of him coming back at you for additional SS?
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Old 07-11-2007, 03:53 PM
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westwood:

Sorry it took so long to get back to you but I've been away.

Thanks for your comments. I know that the separation date is the equalization date for assets, but I wasn't sure if that was true for the matrimonial home if one party is buying the other out two years after the fact. I'm sure if I had paid half of the house expenses, I would have an argument for using the current market value, but I didn't, so I probably don't. As you said, spousal support is a separate issue, so that probably wouldn't count towards my half of the house expenses. I know that the mortgage is deducted from the market value of the home to determine a buyout price, but do you know if real estate fees are also deducted if one party is buying the other out?

Thanks.

Linda
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Old 07-11-2007, 03:56 PM
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wondering50:

Thanks for your response. That would be a good compromise, and I'll suggest it to my STBX husband. I guess we'll have to find someone to value what the house was worth last year. If prices increased substantially, though, we may be back to square one.

Linda
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