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Common Law Issues The law regarding common law relationships is different than in cases of divorce. Discuss the issues that affect unmarried couples here.

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Old 10-24-2006, 10:09 AM
Mandy Mandy is offline
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Default Buy outs of Joint Ownership

If we both own the home, how do you determine teh value of the buyout.....it is still mortgaged to the bank, and has increased in value of about $20,000. Is there a formula? Am I entitled to half of the whole value of the house, or just the value increase, or what isn't mortgaged? Thanks to all and anyone who can halp, and thanks again to logicalvelocity for the super fast and helpful response about the dog...i can't tell you how much I appreciated that link. Thanks again.
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Old 10-24-2006, 11:41 AM
logicalvelocity logicalvelocity is offline
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Mandy,

as you mentioned,

Quote:
If we both own the home, how do you determine teh value of the buyout
I am not sure of the ownership arrangement, but absence of any agreement or contract respecting same, If two parties are on title to the dead, then a presumption is that both parties own the home equally 50-50.

To determine the value, have the home appraised by a licensed reputable professional property appraiser. (not a real estate agent) Cost of same is usually under $400. Banks often use independent appraisers for assessing a mortgage application. Costs of this appraisal should be shared between the parties.

Quote:
it is still mortgaged to the bank, and has increased in value of about $20,000. Is there a formula? Am I entitled to half of the whole value of the house, or just the value increase, or what isn't mortgaged?
Is your name on the mortgage? if so you are equally liable for same.

Generally, my belief is that in a straight forward situation and if it is agreed that the co-owned home is to be sold to a third party, take the appraised value and subtract the liabilities such as the principal mortgage owing, mortgage penalty, closing costs, real estate commission fees etc. To demonstrate see the example

Appraised value = 200K
less Mortgage = 170K
less Mort age penalties = 2.4K
less closing costs = 3K
less real estate = 10K

leaves 14.6 K for equalization

As demonstrated, in the above example, the remainder to be equalized between the parties. If one party put the initial down payment, they should receive credit before any equity is equalized.

If one party decides to keep the home, then they have to purchase the other party out from title and assume the existing mortgage or arrange an independent mortgage. The party keeping the home is exclusively liable for real estate fees and is to be excluded from the equalization. A party that put an initial down payment should receive credit for same before equalization. Note that most mortgages allow for assumption, but if the mortgage is defaulted subsequently, the bank could come after the original mortgagee's.

Some things to remember that if you have to take legal action by way of an application with the courts, it is most likely a court will order the home to be sold as it is equally co-owned. If one party is not co-operative, in its sale, and action has to be taken with the courts, be sure to seek costs of the action.

lv
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Old 10-24-2006, 01:50 PM
Mandy Mandy is offline
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Default Sorry - I think I need clarification...

If he wants to buy me out, how does that work....does he owe me half of the value of the house? I am not asking for half of the value (not even close) but he is insisting on buying me out for basically what I put down on the house 3 years ago, and I am pretty sure that I am entitled to more than that. Sorry to post so much here but I am a little stumped as to what I should do? Thanks again for the quick reply, you really know your stuff....and I appreciate that.
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Old 10-24-2006, 05:07 PM
mollypop mollypop is offline
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Don't agree to anything without your lawyer!!!!!

My husband tried to get me to sign off on the house and in exchange, he "wouldn't go after my pension" from work. I'm not a lawyer but I also didn't just fall off the turnip truck....I knew it didn't work that way.
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Old 10-24-2006, 05:49 PM
logicalvelocity logicalvelocity is offline
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Mandy,

from what you mentioned,

Quote:
If he wants to buy me out, how does that work....does he owe me half of the value of the house? I am not asking for half of the value (not even close) but he is insisting on buying me out for basically what I put down on the house 3 years ago, and I am pretty sure that I am entitled to more than that.
It appears that you have been have discussions in this regard. If he wants to buy you out, your downpayment is excluded from the appraised equalization and real estate fees are excluded. You may have some legal fees involved getting your name off the title and penalties incurred to close out the existing joint mortgage in place would be deducted from net equalization. If I were you, as "mollypop" has mentioned, I would speak and retain a good lawyer such as Jeff, and perhaps have a separation agreement drawn up to facilitate this instrument transfer.

lv
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