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Divorce & Family Law This forum is for discussing any of the legal issues involved in your divorce.

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Old 04-01-2012, 06:35 AM
Katana13 Katana13 is offline
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Default When are Promissory Notes Null and Void?

When we got married in 2006, my husband and his mother's names were on the mortgage of our matrimonial home because he owned it prior to us cohabiting. He refused to add my name to the title or to the mortgage and he refused to take his mothers name off.
My ex has a promissory note that was written up between him & his mother in 2003 prior to us cohabitating in 2005. His mother had given him a "loan" or "downpayment" for him to purchase our matrimonial home. The promissory note says that the will pay the amount back (without interest) starting in 2008 for a period of 20 years. It also reads that his mother "in the event of the sale or other disposition of the property, one half of the net increase in value thereof shall be attributed to her & paid at that time."

We are trying to figure out the division of property etc... and due to his mother's name being on the landtitle and on the mortgage and the promissory note, they are subtracting the amount which his mother put down, plus subtracting her "interest" in the home dues to the promissory note.

There has been no payments of this loan to his mother. I am wondering if the conditions in the contract are not followed... Would this make the promissory note null and void?

I've tried searching for an answer online, but cannot seem to find one.

Any help would be appreciated.

Thanks

Last edited by Katana13; 04-01-2012 at 06:37 AM. Reason: Need to add some information
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Old 04-01-2012, 07:32 AM
standing on the sidelines standing on the sidelines is offline
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she is still on the title and mortgage, that is the most important point. She owns half the house. The best you can hope to receive is half of his half.

Not sure if the contract between him and his mom is valid, but it does sound like he got part of his inheritence early to help with the down payment to buy the house. To me the way they are doing it should be valid, even without the note. They had an agreement that the downpayment was to be paid back when the house was sold and that she would get half the increase in value. That sounds fair to me considering they were partners in the house.
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Old 04-01-2012, 07:45 AM
Katana13 Katana13 is offline
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Originally Posted by standing on the sidelines View Post
she is still on the title and mortgage, that is the most important point. She owns half the house. The best you can hope to receive is half of his half.

Not sure if the contract between him and his mom is valid, but it does sound like he got part of his inheritence early to help with the down payment to buy the house. To me the way they are doing it should be valid, even without the note. They had an agreement that the downpayment was to be paid back when the house was sold and that she would get half the increase in value. That sounds fair to me considering they were partners in the house.
Yes, her name being on the mortgage & title are the most important point.
I agree with you and I don't want to discount her investment.
I just wasn't sure if the note would still be valid since it is a binding contract - however it is a binding contract between them and not me. However, should he not have this amount owing to his mother in his liabilities?

He told his lawyer that he hasn't made any payments on the promissory note (and that there is no intention). When we got together, I was told by him that it was a gift from his step-dad, then I found the promissory note and asked him about it. He told me he'd never have to re-pay the "loan" they just did it for "legalities"
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Old 04-01-2012, 07:52 AM
standing on the sidelines standing on the sidelines is offline
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He was covering his ass like i wish i would have done with my downpayment. I put down 11k of my own, 15k of early inheritence vs his 5k. The two people involved in a binding contract can change the terms as it does along, as long as they both agree.

I think he would have to put the loan into the liabilities section though. That will bring down his net worth a bit more.
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Old 04-01-2012, 07:59 AM
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Originally Posted by standing on the sidelines View Post
He was covering his ass like i wish i would have done with my downpayment. I put down 11k of my own, 15k of early inheritence vs his 5k. The two people involved in a binding contract can change the terms as it does along, as long as they both agree.

I think he would have to put the loan into the liabilities section though. That will bring down his net worth a bit more.
I thought he would have to put this in his sworn list of assets and liabilities, but he didn't. He actually didn't put much in his list at all. Do you know if I can request him to re-do his list? or maybe he doesn't need to?
It's all a learning curve which I wish was just over! lol!
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Old 04-01-2012, 08:18 AM
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Originally Posted by Katana13 View Post
I thought he would have to put this in his sworn list of assets and liabilities, but he didn't. He actually didn't put much in his list at all. Do you know if I can request him to re-do his list? or maybe he doesn't need to?
It's all a learning curve which I wish was just over! lol!
the financials are the worst thing to do. Do you have a copy of the note between him and his mother?? I would mention it to your lawyer and they can send a letter to his mentioning that he forgot (intentionally or unintentionally) to add the loan.
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Old 04-01-2012, 09:04 AM
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If he adds the loan to his liabilities, this reduces your share of the equalization.

He is actually being ethical here. If his mother has forgiven the loan, then he doesn't owe her and wouldn't ethically be able to claim this as a liability.

Although it is possible to ask that he redo his financials, what do you have to gain by it? You would be dragging out the settlement, not gaining anything in equalization, possibly adding somewhat to your own legal costs, certainly adding to his, and losing any remaining goodwill and amicability in the negotiations.

Unless you feel that his financials are so far off that the equalization would be unfair, I would leave it alone. My ex's financials were a disaster, but the difference would only have been a few hundred in my favour (going by what I knew were her actual assets at separation) and it wasn't worth the cost of a letter from my lawyer to ask her to redo them.
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Old 04-01-2012, 09:38 AM
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SOS: I thought I had covered my ass but apparently I didn't do a very good job.

There's a promissory note or two floating around in my mess too but they have long been buried underneath the wreckage of the past few years, his bogus bankruptcy etc.

Good Luck K13.
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Old 04-01-2012, 09:41 AM
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SOS: I thought I had covered my ass but apparently I didn't do a very good job.

There's a promissory note or two floating around in my mess too but they have long been buried underneath the wreckage of the past few years, his bogus bankruptcy etc.

Good Luck K13.
thats the thing, its sooo hard to make sure that you cover your ass for everything. Ironclad agreements, do they even exist???
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Old 04-01-2012, 09:57 AM
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I'm in the "nay" camp, SOS. Rarely, it seems is ANYTHING iron-clad.
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downpayment, matrimonial home, promissory note, property division


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