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Seeking advice on buying out exWW

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Okokok posted 6/12/2020 06:23 AM

EDIT:

Thank you all so much. I'm editing this little note into my original post as well because I think I've narrowed down what I'm struggling with the most to just one issue.

Major issue: exWW's gave us a sum of money to help buy the home back in the day. It was a gift to both of us, of course.

The problem is that most of that money (say 80%) went to things that had nothing to do with equity in the home. Things like closing costs, inspections, possibly even furniture and moving costs.

The money that went into down payment is easily visible and calculable, and I know how to split that equitably, and we will.

But that money that went to the other stuff? The 80%? It's just gone. Gone a long time ago. We made joint decisions and spent it on certain things long ago, while married.

I no longer benefit from that money in any real financial way. But I do have the house. Except, ya know, I'm now going to *buy* the house again and I'm doing that myself, spending a whole host of new money to do so.

Now, she would like me to pay her "her portion" of that money her parents gave us that has already been spent on things that were not realized in home equity.

I'm 100% positive I have no legal requirement or reason to do this.

I'm maybe 75% positive I have no ethical reason to do this. But I struggle with that. I hate the idea of her parents thinking I somehow stole money from them or their daughter (I know I didn't and ethically have done nothing wrong here; and, again, I'm about to buy this house myself), and I don't love the idea that she would think that, either, even if she's wrong. I'm also bad at this sort of thing and just tend to take the path of least resistance.

To put it into perspective: if we were to just sell the house tomorrow, we would split the equity in some fair way and that would be it. The question of that other money from long ago wouldn't even come into play, because again, it's gone, was a gift to both of us at the time, and we spent it equally, together.

So really, as I type and think out loud here, I'm realizing that the only reason this is becoming a question is because *I'm* the one who's doing the purchasing here.

Am I missing something???

~
Original post:

Hi, looking for perspective on 1) fair splitting of home equity, 2) a few other things that I'll detail below. Struggling to wrap my head around what's "fair" and what isn't.

Very thankful to anyone who can take the time to read this and give me some perspective.

Basic questions for those who may not want to read everything:

1) exWW has paid 25% of expenses for life of mortgage. Am I wrong to think that this means she is deserving of 25% of the equity in the home, or am I missing something?

2) exWW's parents gave us some money to help purchase the home at the beginning. Is she entitled to reimbursement of any share of that gift? Most of that money went to closing costs; some went to down payment.

3) exWW inherited some money prior to the A, and we remodeled a room with that money. Is she entitled to reimbursement for any of that?

4) Not likely, but possible that exWW will tell me she's entitled to 50% of the equity in the home. I would find that unfair, I think, as I have paid for 75% of it. Am I missing something thinking that way?

~

More explanation below:

So after a few years and selling some other jointly-held properties, exWW and I are finally looking to cut our final tie with the primary home. I had originally thought I'd sell and I'd buy something else, but for a few reasons (notably nothing really available right now), I'm deciding to purchase this house (which I've remained in the entire time; she left a few years ago) in my name and buy her out.

However, I'm struggling to wrap my head around fair splitting of equity and other things that may be arguably "owed" to her. Trying to get out in front of the conversation.

To be clear: I'm not interested in anything other than complete fairness. Not trying to get more than I deserve or give her less than she deserves.

Rough numbers:

1) House has been owned for X number of years. She was in it for half of those years, and payed 50% of the mortgage, taxes, etc. during that time period. Also of course 50% of all expenses. Once she left, I took on all payments and expenses.

2) This means she payed roughly 25% of all mortgage/taxes/etc. in this home so far. So, at a bare minimum, I believe she deserves to be payed out 25% of the equity in the home. Anyone think I'm missing something there?

3) exWW's parents gave us money to help cover some expenses at the beginning, and some of that money went to down payment (most went to closing costs, inspections, etc.). I'm guessing she will argue that she's entitled to reimbursement for some of that. I truly am unsure of that -- is she owed reimbursement for money her parents gave to both of us way back in the day, but that was all spent on closing costs and things of that nature? Things that didn't go into equity-building? I'm sort of feeling like those expenses from a long time ago are over and done with and I'm not benefiting from them at all once I purchase this home myself; I will have a whole host of new closing costs (etc.) that I will be paying on my own. However, maybe there is some ethical thing I'm not seeing.

4) We did some home renovations with money inherited from exWW's side of the family back when she still lived here. I am expecting her to argue that she should be reimbursed for some of that. Again, I'm struggling to see my ethical position here. Is she owed money, ethically or legally, as a result of that? Again, the inheritance was a gift to both of us, and now I have a remodeled family room. But do I have to pay her for that for some reason?

For what it's worth, the divorce decree only says we split equity. All other debts, assets, expenses, etc. were settled legally long ago.

Thanks again.

[This message edited by Okokok at 8:37 AM, June 13th (Saturday)]

barcher144 posted 6/12/2020 10:11 AM

This probably depends on the laws where you live. You should consult a lawyer.

In my state, non-marital assets would include items that one of you possessed prior to the marriage. So, for example, I purchased a canoe before my STBXW and I got married. I get that canoe, 100% free and clear, all mine.

This can get more confusing, but non-marital assets could also include items that are easily. So, for example, if I had some Apple stock prior to getting married and then I sold it after we got married and purchased GE stock with the funds... then the GE funds would be mine, free and clear.

The other big category of non-marital assets are gifts given to EXPLICITLY ONE OF YOU by a THIRD PARTY. So, for example, STBXW's parents gave me a blue ray of The Incredibles for my birthday, a month before she and I separated. I get that, free and clear.

So, applying these standards to your questions...

1. Yes, you are wrong. Martial assets are marital assets. You are each entitled to 50% of the equity in your home.

2. No, as you describe it... that was a gift from a third party to the TWO OF YOU... so that's a marital asset and it's split 50-50.

3. This one is more difficult. Because the inheritance was specifically to her (I think... you aren't 100% clear on that), then it was hers. However, since she converted it to a marital asset... then it could get lost in the shuffle.

4. In my state, she would be entitled to 50% equity in your home. I would say that you are thinking wrong... you are viewing specific things as "yours" or "hers" while you were married. It doesn't work that way... everything was equally yours and hers.

I get it, more or less. You feel like you made all of the money and she cheated and that's unfair. But, the law doesn't work that way...

josiep posted 6/12/2020 10:42 AM

If the divorce decree says you split the equity, there are no options other than to split it. And I'm guessing the court meant 50/50.

It is a sticky wicket but I don't think you have to worry about it because of the divorce decree. After you sell, you take whatever's left after all the expenses are paid (realtor, closing costs, taxes, etc.) and split it in half.

It also follows that you should not spend one penny doing anything to the house because you will not be reimbursed or compensated for it. If the house needs any repairs or fixups in order to sell, make sure your XWW pays half up front before the work is done or it'll all come out of your pocket. If she's going to get 50% of the proceeds, that's only fair.

All the other details of what money came from where way back when I don't think will matter because the inherited and parental contributions were all spent on the marital home for the benefit of both of you. Same with the money you've paid.

That said, it's only fair that she only receive half of the proceeds based on the market value of the house at the time she abandoned the marital home but I'm not sure you'd win that one if she took it to court. Will the payment go through the court system and put the final page in your decree? Or is just to be done between the two of you? Personally, I'd just send her a check when the time comes with an explanation that it's half the proceeds based on market value when she moved out. Put the rest in the bank in case she decides to fight it but she might just take it and be happy with it.

But naturally, I'm sure you realize, this is just my opinion based on what I see as logical. And as we all know, the law isn't always based on logic or fairness. So read about the laws in your state and maybe ask a couple of lawyers in those online forums where they help people. Did you have an attorney when you divorced? Perhaps he can elaborate on exactly what that sentence means about splitting the equity.

Okokok posted 6/12/2020 10:53 AM

barcher144, thanks for that feedback.

I would say that you are thinking wrong... you are viewing specific things as "yours" or "hers" while you were married. It doesn't work that way... everything was equally yours and hers.

Yeah, I think I may have muddied the waters a bit, but I'm definitely not thinking like that, or not trying to. We have been divorced for three years and I'm super aware of the equal ownership of things and I'm perfectly fine with that. We have already split all assets except this house, and it's all been worked out legally.

I should also say that we're pretty amicable and trying to do this without any lawyers at all.

1. Yes, you are wrong. Martial assets are marital assets. You are each entitled to 50% of the equity in your home.

While I understand that she may be legally entitled to 50% of the home equity without a legal cage match, I don't think she would push for that. I've lived in the house and paid for everything by myself, post-divorce, for half the time we've owned it. I do not think she would want to take half of the money I have paid on the the principal post-divorce. I think that would feel to her like she was just taking money from me, and I agree with her. She has put nothing into the home financially since we've divorced, and I really doubt she would feel entitled to it. I think the 25% thing feels right to her.

2. No, as you describe it... that was a gift from a third party to the TWO OF YOU... so that's a marital asset and it's split 50-50.

Right. And again, the majority of that gift, which was to both of us, went to pay for things that did not build equity. Closing costs, inspections, etc. To me not much different than buying any consumable, like groceries or clothing, etc. That money feels gone to me and like there should be no ethical or legal reason for me to now pay it back to her -- literally as I wouldn't pay her back for groceries she bought for the house 5 years ago. Still, I hate the idea of her (or her parents) thinking I somehow "owe" this money (that exists nowhere for me). At the same time, I'm trying not to feel bad about it -- they gave us a gift, and that's not my fault.

3. This one is more difficult. Because the inheritance was specifically to her (I think... you aren't 100% clear on that), then it was hers. However, since she converted it to a marital asset... then it could get lost in the shuffle.

It wasn't. Actually it didn't come to her in a legal way at all, but instead was equally distributed to her from another family member who just wanted to spread it around. It came to us as gift to the two of us, though it was the result of one of her family members dying. I do not think there is a legal claim to compensation for that, but there is still the ethical question for me.

4. In my state, she would be entitled to 50% equity in your home.

See above. Again, I think you are likely correct: legally, she probably is. Would take lawyering for me to get out of that, legally.

At the end of the day, I think she would want 25% of equity + extras or compensation for other things. It's the extra stuff that has me spinning the most.

Okokok posted 6/12/2020 11:58 AM

Thank you, josiep.

I should clarify that I'm refinancing in my name and buying her out, *not* selling. In most ways selling would make this much easier, but of course we would lose a ton of money to realtors, so there is that savings.

It also follows that you should not spend one penny doing anything to the house because you will not be reimbursed or compensated for it. If the house needs any repairs or fixups in order to sell, make sure your XWW pays half up front before the work is done or it'll all come out of your pocket. If she's going to get 50% of the proceeds, that's only fair.

Yeah, of course in the past several years, I have already done this. Refinished rooms, etc. Can't undo it now.


Will the payment go through the court system and put the final page in your decree? Or is just to be done between the two of you?

No courts. She'll just get a check.

But naturally, I'm sure you realize, this is just my opinion based on what I see as logical.

Of course!

Did you have an attorney when you divorced? Perhaps he can elaborate on exactly what that sentence means about splitting the equity.

No attorneys back then, nope.

Phoenix1 posted 6/12/2020 13:24 PM

The concept of "fair" is in the eyes of the court, just as beauty is in the eyes of the beholder. Fair does not necessarily mean equal, which is generally the standard in an equitable distribution state (which is what my state is).

I could see "fair" being half the equity value at the time of D. All the other stuff is just noise because, generally speaking (but state law specific, of course), anything that was used to benefit the marriage becomes a marital asset regardless of original source and is subject to equitable division.

fooled13years posted 6/12/2020 13:31 PM

Okokok

Yeah, I think I may have muddied the waters a bit, but I'm definitely not thinking like that, or not trying to

When you are the BS and are going through, or went through, a divorce there is little about either that seems fair.

josiep posted 6/12/2020 16:08 PM

I also meant to say that you should get credit for all the money that went against the principle of your mortgage since the divorce since you paid 100%.

Based on your subsequent post where you mentioned that youíre trying to be amicable, Iím wondering if you could just come right out and ask her how she Much she expects. Donít give her any ideas of what youíre thinking just ask her out right. And what she thinks is fair might be what you think is fair and then you donít have to keep doing all these mental gymnastics.

Every scenario that you mentioned earlier sounds very fair. But truly I think you should try to find out how much the house was worth when she left and what the balance was on the mortgage and figure it out from there. That way you get credit for all the gains since that time And that would certainly be a reasonable approach.

BetterTimesAhead posted 6/12/2020 19:56 PM

I think every situation is unique. There are basic tenets of 50/50 but always exceptions. For example, I bought my house before we got married and I am the only one on the deed. When/if the time comes, it will not be 50/50.

The prior suggestion is probably your best bet. Before you speak with the ex, do your own spreadsheet and then ask what she expects. You might be surprised how close you are.

Okokok posted 6/13/2020 08:36 AM

Thank you all so much. I'm editing this little note into my original post as well because I think I've narrowed down what I'm struggling with the most to just one issue.

Major issue: exWW's gave us a sum of money to help buy the home back in the day. It was a gift to both of us, of course.

The problem is that most of that money (say 80%) went to things that had nothing to do with equity in the home. Things like closing costs, inspections, possibly even furniture and moving costs.

The money that went into down payment is easily visible and calculable, and I know how to split that equitably, and we will.

But that money that went to the other stuff? The 80%? It's just gone. Gone a long time ago. We made joint decisions and spent it on certain things long ago, while married.

I no longer benefit from that money in any real financial way. But I do have the house. Except, ya know, I'm now going to *buy* the house again and I'm doing that myself, spending a whole host of new money to do so.

Now, she would like me to pay her "her portion" of that money her parents gave us that has already been spent on things that were not realized in home equity.

I'm 100% positive I have no legal requirement or reason to do this.

I'm maybe 75% positive I have no ethical reason to do this. But I struggle with that. I hate the idea of her parents thinking I somehow stole money from them or their daughter (I know I didn't and ethically have done nothing wrong here; and, again, I'm about to buy this house myself), and I don't love the idea that she would think that, either, even if she's wrong. I'm also bad at this sort of thing and just tend to take the path of least resistance.

To put it into perspective: if we were to just sell the house tomorrow, we would split the equity in some fair way and that would be it. The question of that other money from long ago wouldn't even come into play, because again, it's gone, was a gift to both of us at the time, and we spent it equally, together.

So really, as I type and think out loud here, I'm realizing that the only reason this is becoming a question is because *I'm* the one who's doing the purchasing here.

Am I missing something???

barcher144 posted 6/13/2020 10:30 AM

So really, as I type and think out loud here, I'm realizing that the only reason this is becoming a question is because *I'm* the one who's doing the purchasing here.

Am I missing something???

I think that your follow-up has me more confused than ever before. That's okay. I've had a rough week and I am tired, so don't feel the need to explain.

First, the law is the law. If you and your ex want to do it differently, that's fine too.

Second, my thought is that you specifically focusing on the gift from her parents... and you specifically focusing on the inheritance that she received.... is just making all of this more complicated than needed. I recommend that you stop worrying about the source of the funds... and just split the equity in the home 50-50% and move on with your life.

p.s. Based on the description that you provided, I don't see how a court would rule that the gift from her parents AND the inheritance were anything other than marital assets. As far as I know, the burden of proof that each of these were a non-marital asset would be on her and it doesn't seem like it is there. My GF is going through this now with her ex. He is a little pissed (they're mostly amicable) that she received an inheritance and he didn't receive his cut. But, the check was made out to her name only, thus she HAS proof that the inheritance is a non-marital asset.

Anna123 posted 6/13/2020 10:36 AM

Lots of good stuff here but on the question of "what is fair". I personally think that when a partner lies and cheats, what would truly be 'fair' is for them to walk away and leave all assets with the betrayed.

If this were a mutually agreed divorce with no betrayal, I would agree with your giving in on money from her parents etc., but you didn't plan for or want a divorce. She defaulted on the marriage so that money is not hers any longer.

Same thing, if this was mutual, the 25/75 might not make sense, since the marriage was supposedly a 50/50 team but since she defaulted, no problem going with that. Also, in my case, we did use money from my parents that had since dissipated just like in your marriage. That never came into play in my mind as far as wanting that back from him and her expecting that in my mind is off base. And this is coming from me as the betrayed, for her to bring this up is absolutely ridiculous.

Unfortunately, the law may just say she is entitled to 50% so if you can work something with her that is better than this, that is something to consider.

Good luck working through this. You sound like a nice reasonable person so keep in mind, SHE defaulted on your marriage and there is nothing wrong with getting everything you can. This has been a financial hit that she brought about with her own actions and morally, you deserve MORE compensation than the law allows, so at least aim for what you can. I am just echoing what some others told me when I was divorcing, when I was ready to give a little here and there, and I thank God I listened now.

Take care, and good luck navigating this!

[This message edited by Anna123 at 10:37 AM, June 13th (Saturday)]

Okokok posted 6/13/2020 11:06 AM

Again, thanks! Yeah, I keep getting more confusing I guess.

Same thing, if this was mutual, the 25/75 might not make sense, since the marriage was supposedly a 50/50 team but since she defaulted, no problem going with that.

The math I/we are using is this, if it really doesn't make sense:

Year one of owning home: both lived in house and split payments

Year two: both lived in house and split payments

Year three: both lived in house and split payments

***AFFAIR HAPPENED. SHE MOVED OUT. DIVORCE SOON AFTER. NO MARRIAGE FOR NEXT FEW YEARS IN HOUSE.***

Year four: I lived in house alone and made all payments

Year five: I lived in house alone and made all payments

Year six: I lived in house alone and made all payments

~

So for half of the time with this house, while her name was on the deed, it was effectively my house. The other half of the time (pre-affair/divorce) we paid together for everything. This is why I/we are thinking I deserve more than 50% of the current equity. I've paid in 75% into it.

For what it's worth, our incomes were and are about equal, and this was all confirmed in divorce decree.

messyleslie posted 6/13/2020 13:46 PM

I would offer to do the equity in either:

1. Find comps from 3 years ago and determine equity based on that. Then minus closing costs and agent fees and she gets 50% of that amount.

2. Find the equity today, minus closing costs and agent fees and split that 50/50. Then calculate the amount you have paid in the last three years - from that determine what would have been her 25% that she would have paid had you both continued to live in the house (because the presumption is that you would have been okay continuing with you paying 75% and her 25% had you stayed married) and then that amount is subtracted from her equity portion and given back to you. So in essence she is paying you back for her portion of the mortgage payment that you paid while she wasn't living there.

I think the stuff her parents paid is a wash - it doesn't matter if it was applied directly to your down payment or you paid off joint credit card debt or bought an RV or blew it on slots in vegas - it was given as a gift and then she used it as marital property. If she had put it into an account in just her name or bought herself diamond earrings or something then I would say it was hers to take after the divorce.

Anna123 posted 6/13/2020 14:50 PM

Oh sorry, I didn't read carefully enough. Either way, what her parents gave that is now spent and gone, in my opinion shouldn't be considered. I understand you respecting her parents part in this but besides their daughter was up to no good here - It was a gift to both of you and you both used the gift, it still doesn't make sense to back that out of the home settlement.

Stormycloads36 posted 6/13/2020 16:57 PM

I'm in Washington and kinda have a similar issue with paying the wasband equity after years of divorce. My decree states something like. " stormy has rights to live in the home til xxxx, at that time she must refi or sell. If she sells wasband gets 50% of proceeds after closing costs"

Weird wording right?? Thats what you get from a cheap lawyer.

I didn't think that was fair. I am paying everything from water, dues, repairs, ect ect and he gets 50% after all my hard work?

Sadly I was told that the decree is the final word. Period. If it says that he gets 50% after the sell of the home thats what he gets. Regardless of who lived there after the divorce. I tried the angle of" what if we just say that he is suppose to get 50% from the day of D" the reply was that if that was the case then there would be information about the home in the case file. Like appraisal, how much was owed at that time and so on.

It was advised that if there are repairs done to email the receipt and inform that this is what repair x cost. That way you can fight and have her half of the repair cost come out of the final equity.

Ratpicker posted 6/13/2020 21:11 PM

I got divorced after a trial in a equitable distribution state and I used adultery as grounds in my countersuit (he filed). All assets were divided 50/50. Investments, Savings Bonds, his retirement, his pension. Alimony was awarded at a shockingly high level but it was a 35 yr marriage.

But not the equity in the house. Monetary contributions toward mortgage payments were solely his. I had a part-time job for a while, every paycheck for a year went into an account that paid for a new roof. His marital misconduct was a factor in the award and I believe it can be in Okokok's state. The judge awarded me 70% & WH got 30%, the house was ordered to be sold (during trial neither of us wanted the house). Expenses to prep for sale was to be split 50/50 with me paying the mortgage, taxes & insurance from alimony until sale. Judge set the sale price (appraisers testified to value at trial) with periodic reductions if it didn't sell. Instead I offered to buy him out of his 30% of the equity and he didn't have to pay for any repairs. It was part of an adjusted agreement that he drop his appeal to the State Supreme Court. But the adjusted agreement did have to be signed by the judge.

If the ownership of the house during the marriage was only 3 years, she would only be entitled to a percentage portion of the equity that was gained, payments toward principal, any appreciation during the period = equity. And it is unlikely the court (should it come to that) would carve out the family gift or inheritance for her if she co-mingled it in marital assets.

You might be able to use figures on Zillow that show what the appreciation was like during that period of ownership/marriage. Just to get a ballpark figure.

Okokok posted 6/14/2020 08:01 AM

I have to say, for a relatively boring, procedural SI post, you all have put great care and time into helping me out. I'm so thankful to all who responded here. Thanks!

This discussion has helped me immensely in clarifying some things for myself.

This is the last little thing that ties exWW and I together (besides kids, of course). Super psyched to have it all over and done with in the next 4-6 weeks or so. I'll keep you updated.

Anna123 posted 6/14/2020 09:27 AM

I bet you will be SO Relieved! Congrats early.

HeartFullOfHoles posted 6/15/2020 01:17 AM

If you can get your ex to agree to 25/75 go for it, but don't be surprised if she comes back asking for 50/50. Also keep in mind she also has living expenses so it could be argued those could also come into play as expenses to partially compensate for your 100% payment at the house.

I tried to give my ex a fair offer to keep the house property we lived on. She wanted 1/2 the possible sale value and expected me to take the mortgage and some other significant expenses to recover the value of the property 100% myself. She ultimately ended up with less than I offered her.

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