[YANALFilter] A+B = Awkward financial situation
February 21, 2010 8:34 PM
15K loan + breakup = who owes what?
I'll try to keep this short.
A owns a house. A and B fall in love and B moves into said house. A + B live in house for a few years, then remodel house. They borrow 15K from B's parents to put final touch on house, no paperwork, on good faith, etc. Live happily ever after...for about a year or so, then A dumps B. Since A bought the house before they met and B is not on the deed, mortgage, has no equity in home, etc (per A), B moves out.
A had been repaying 15K loan for a while, but stopped due to unemployment, saying payments would restart upon re-employment. Upon A's re-employment, though, A claims that B should finish paying the loan, since the money was loaned to them as a couple. B maintains that the loan was used to finish the house, which is in A's name and which A continues to live in, so A is responsible for repayment.
Other things to know: A's income was always anywhere from 2-5x what B's was. When B went through bouts of unemployment, A supported B like any spouse would, and they were registered domestic partners for the last year of the relationship. That's another reason A thinks B should repay the loan - to even out the fiscal support of B through the rough times of the relationship.
So who is responsible for repaying B's parents?
I'll try to keep this short.
A owns a house. A and B fall in love and B moves into said house. A + B live in house for a few years, then remodel house. They borrow 15K from B's parents to put final touch on house, no paperwork, on good faith, etc. Live happily ever after...for about a year or so, then A dumps B. Since A bought the house before they met and B is not on the deed, mortgage, has no equity in home, etc (per A), B moves out.
A had been repaying 15K loan for a while, but stopped due to unemployment, saying payments would restart upon re-employment. Upon A's re-employment, though, A claims that B should finish paying the loan, since the money was loaned to them as a couple. B maintains that the loan was used to finish the house, which is in A's name and which A continues to live in, so A is responsible for repayment.
Other things to know: A's income was always anywhere from 2-5x what B's was. When B went through bouts of unemployment, A supported B like any spouse would, and they were registered domestic partners for the last year of the relationship. That's another reason A thinks B should repay the loan - to even out the fiscal support of B through the rough times of the relationship.
So who is responsible for repaying B's parents?
for real, lawyer.
posted by toodleydoodley at 8:37 PM on February 21, 2010
posted by toodleydoodley at 8:37 PM on February 21, 2010
Legally, I don't know, ask a lawyer.
Ethically, pretty clearly, A should repay the entirety of the loan (or at least the vast majority, if B has already paid some of it), as B is not benefiting from the remodel. Perhaps it would be fair to deduct some of the repayment from A's tab because of the (short) time B lived there, but I have no idea how you'd prorate that. The "supporting like a spouse would" seems to be a red herring.
posted by axiom at 8:40 PM on February 21, 2010
Ethically, pretty clearly, A should repay the entirety of the loan (or at least the vast majority, if B has already paid some of it), as B is not benefiting from the remodel. Perhaps it would be fair to deduct some of the repayment from A's tab because of the (short) time B lived there, but I have no idea how you'd prorate that. The "supporting like a spouse would" seems to be a red herring.
posted by axiom at 8:40 PM on February 21, 2010
I think A should be the one to pay, but my thoughts are irrelevant since I am not the person whose profession begins with L and ends with AWYER you should certainly be calling Monday morning.
posted by MegoSteve at 8:44 PM on February 21, 2010
posted by MegoSteve at 8:44 PM on February 21, 2010
A + B live in house for a few years, then remodel house.
Lawyer ... and ask about common-law marriage in your locale.
posted by Cool Papa Bell at 8:48 PM on February 21, 2010
Lawyer ... and ask about common-law marriage in your locale.
posted by Cool Papa Bell at 8:48 PM on February 21, 2010
I suppose while this is kind of a "legally" question, it's also a "what do other people think" question, although, come to think of it, there HAVE to be some lawyers on AskMe, right? Where are they when you need them?
Hi, lawyers! :)
posted by buzzkillington at 8:51 PM on February 21, 2010
Hi, lawyers! :)
posted by buzzkillington at 8:51 PM on February 21, 2010
I don't think A should go back on their word about repaying later.
Also, A enjoys the improvements while B does not. A gave unemployment support as a gift, while B's parents gave the money as a loan.
posted by salvia at 8:57 PM on February 21, 2010
Also, A enjoys the improvements while B does not. A gave unemployment support as a gift, while B's parents gave the money as a loan.
posted by salvia at 8:57 PM on February 21, 2010
I don't think A gets to be paid back for supporting B while B was unemployed.. A made the decision to do that presumably out of love and kindness and wanting B to be happy and healthy. If A expected B to be on the hook for that, A should have said so beforehand. That's part of what you do when you're spouses. If A had taken the loan from the bank, A would still have to repay the bank and B wouldn't be a part of that transaction at all. The only thing that brings B into the equation is that it's B's parents. But I can't really think of any reasons why B should be paying out while A gets free improvements to his house.
posted by amethysts at 8:57 PM on February 21, 2010
posted by amethysts at 8:57 PM on February 21, 2010
buzzkillington: They're not trying to be deliberately unhelpful; there are potential legal implications to giving advice in a situation like this -- hence the common "I am not a lawyer" or "IANAL" disclaimer.
Seriously, though, it sounds like you do need a lawyer. :-)
posted by danb at 8:58 PM on February 21, 2010
Seriously, though, it sounds like you do need a lawyer. :-)
posted by danb at 8:58 PM on February 21, 2010
Ethically, I think A should repay the money.
Legally, (IANYL, this is not legal advice) I think the law is too jurisdiction-specific for anyone to provide you with good legal advice over the internet.
In sum: LAWYER. Real-life one. Get one.
posted by sallybrown at 9:00 PM on February 21, 2010
Legally, (IANYL, this is not legal advice) I think the law is too jurisdiction-specific for anyone to provide you with good legal advice over the internet.
In sum: LAWYER. Real-life one. Get one.
posted by sallybrown at 9:00 PM on February 21, 2010
Oh, I know danb, I was just saying that I appreciate all opinions, whether legal or personal, on the matter so all should feel free to throw in their two cents.
And for the record, I agree with amethysts!
posted by buzzkillington at 9:02 PM on February 21, 2010
And for the record, I agree with amethysts!
posted by buzzkillington at 9:02 PM on February 21, 2010
You need lawyers because there's no answer you can get from AskMe that'd be otherwise. It's not like there's AN ANSWER - what you've got there is an adversarial situation with a bunch of money and competing claims that ties somehow into whatever "domestic partner" means wherever it is that you live.
(If you're just looking for opinions on a human level, though, I think A's being a shit).
posted by moxiedoll at 9:03 PM on February 21, 2010
(If you're just looking for opinions on a human level, though, I think A's being a shit).
posted by moxiedoll at 9:03 PM on February 21, 2010
I have *zero* idea about legal stuff on this and have had about...oh...zero legal training, so I'll just answer from a "this is what I think on a purely common sense basis".
A pays for the loan. B may have put in sweat equity helping out with/during the remodel and will see no benefit from it when/if the house sells. As far as A helpiing out B during times of unemployment, that is what people in love do for each other and wouldn't be considered in mature circles to be a loan - if A is now claiming it is then A is kinda being jerk-esque.
posted by Salmonberry at 9:05 PM on February 21, 2010
A pays for the loan. B may have put in sweat equity helping out with/during the remodel and will see no benefit from it when/if the house sells. As far as A helpiing out B during times of unemployment, that is what people in love do for each other and wouldn't be considered in mature circles to be a loan - if A is now claiming it is then A is kinda being jerk-esque.
posted by Salmonberry at 9:05 PM on February 21, 2010
Only a lawyer can sort it out legally.... there is no clear answer.
Generally you can't write off "I bought you food when you had no job" against "WE borrowed money from someone and need to pay it back"
My ethical take, if you were a common-law couple when you borrowed the money - you are both on the hook for repaying the money, equally. At the time you borrowed it, everyone understood the situation - the money wasn't for A - it was for the couple. You weren't married. The money would presumably be used to fix up the house.
If they money really did go to fix up the house, and not somewhere else, and B is not making a claim for their share of equity in the break-up - it would seem morally correct for A to repay the remainder in good faith, as A is getting all the benefits of the loan, and B is not.
But.... lawyer up - even if A & B come to a mutually acceptable agreement, get a lawyer each to get it down in writing so nobody can welch later.
posted by TravellingDen at 9:06 PM on February 21, 2010
Generally you can't write off "I bought you food when you had no job" against "WE borrowed money from someone and need to pay it back"
My ethical take, if you were a common-law couple when you borrowed the money - you are both on the hook for repaying the money, equally. At the time you borrowed it, everyone understood the situation - the money wasn't for A - it was for the couple. You weren't married. The money would presumably be used to fix up the house.
If they money really did go to fix up the house, and not somewhere else, and B is not making a claim for their share of equity in the break-up - it would seem morally correct for A to repay the remainder in good faith, as A is getting all the benefits of the loan, and B is not.
But.... lawyer up - even if A & B come to a mutually acceptable agreement, get a lawyer each to get it down in writing so nobody can welch later.
posted by TravellingDen at 9:06 PM on February 21, 2010
Not a lawyer, but I'd think about it like this:
1. It doesn't matter what you spent the loan money on, so put that to the side for now. A and B jointly borrowed 15K from B's Parents ("Bank"). Bank can go after either A or B for full payment of the loan. However, both A and B could sue each other for their obligation under the loan (So, if Bank made A pay off entire $15K loan, A could also sue B to require B to pay $7500 to A. It would also work the same in reverse. If Bank made B pay off entire $15K loan, B could sue A to require A to pay $7500 to B). Bottom line: A owes $7500 to Bank and B owes $7500 to Bank.
2. B's $7500 is now invested in property owned by A (the "Asset"). B feels that B should get that money back. Since A and B were in a domestic partnership, it might be the case that B's investment ($7500) and possible mortgage payments (OP did not mention) mean B now has an ownership stake in Asset. Alternative scenario is B was simply paying rent and made a $7500 improvement to a property B did not own and which means B cannot recover any money (B should endeavor not to do this in the future!).
Lawyers could get involved, but the amount is somewhat low and may not lead to the best solution. Glad to see you're asking about fairness. I'm curious what other people will say.
Should happen: A repays $7500 to Bank.
Could happen: A pays $7500 to B because it's the right thing to do (which B then repays to Bank). A and B walk away feeling like good people and sign a statement saying B has no interest in Asset.
OR
A pays $X to B because $X is fair since A really did help out financially while B was unemployed and it's the right thing to do. A and B walk away feeling like good people and sign a statement saying B has no interest in Asset.
posted by jrholt at 9:23 PM on February 21, 2010
1. It doesn't matter what you spent the loan money on, so put that to the side for now. A and B jointly borrowed 15K from B's Parents ("Bank"). Bank can go after either A or B for full payment of the loan. However, both A and B could sue each other for their obligation under the loan (So, if Bank made A pay off entire $15K loan, A could also sue B to require B to pay $7500 to A. It would also work the same in reverse. If Bank made B pay off entire $15K loan, B could sue A to require A to pay $7500 to B). Bottom line: A owes $7500 to Bank and B owes $7500 to Bank.
2. B's $7500 is now invested in property owned by A (the "Asset"). B feels that B should get that money back. Since A and B were in a domestic partnership, it might be the case that B's investment ($7500) and possible mortgage payments (OP did not mention) mean B now has an ownership stake in Asset. Alternative scenario is B was simply paying rent and made a $7500 improvement to a property B did not own and which means B cannot recover any money (B should endeavor not to do this in the future!).
Lawyers could get involved, but the amount is somewhat low and may not lead to the best solution. Glad to see you're asking about fairness. I'm curious what other people will say.
Should happen: A repays $7500 to Bank.
Could happen: A pays $7500 to B because it's the right thing to do (which B then repays to Bank). A and B walk away feeling like good people and sign a statement saying B has no interest in Asset.
OR
A pays $X to B because $X is fair since A really did help out financially while B was unemployed and it's the right thing to do. A and B walk away feeling like good people and sign a statement saying B has no interest in Asset.
posted by jrholt at 9:23 PM on February 21, 2010
I'm not a lawyer but I think A is smoking crack if they really think that their ex is going to pay this loan off for them
posted by fshgrl at 10:02 PM on February 21, 2010
posted by fshgrl at 10:02 PM on February 21, 2010
Oh, and if they were domestic partners and B was helping pay the mortgage on the house? That may be a can of worms that A does not want to open.
posted by fshgrl at 10:03 PM on February 21, 2010
posted by fshgrl at 10:03 PM on February 21, 2010
Good opinions from the MeFis above. This is an excellent reminder why one should NEVER get into a financial situation (taking out a loan together, co-signing for loans, etc) until you are legally married or have a legal partnership agreement.
posted by MsKim at 10:26 PM on February 21, 2010
posted by MsKim at 10:26 PM on February 21, 2010
Not a lawyer, yadda yadda yadda.
My two cents is that A is responsible for repaying half the loan, B is responsible for the other half (which its likely that B's parents will just write off). The loan was to both of them and that means shared responsibility.
I learned a few years ago to get things in writing just in case. And it only cost me $5k! I feel like i got off cheap.
posted by fenriq at 10:40 PM on February 21, 2010
My two cents is that A is responsible for repaying half the loan, B is responsible for the other half (which its likely that B's parents will just write off). The loan was to both of them and that means shared responsibility.
I learned a few years ago to get things in writing just in case. And it only cost me $5k! I feel like i got off cheap.
posted by fenriq at 10:40 PM on February 21, 2010
For fairness' sake, I'd say A should pay it. But it doesn't matter what we think is fairer, it only matters what you can enforce through legal channels.
posted by ishotjr at 11:04 PM on February 21, 2010
posted by ishotjr at 11:04 PM on February 21, 2010
A gets the benefit of the loan, in that it's their house that benefited from it. A therefore will get all the profit from that investment in that house.
I think A should pay it back, but in reality B is the one that has the relationship with the lender, so it probably more directly 'liable' - at least in lender's eye perhaps.
posted by sycophant at 11:24 PM on February 21, 2010
I think A should pay it back, but in reality B is the one that has the relationship with the lender, so it probably more directly 'liable' - at least in lender's eye perhaps.
posted by sycophant at 11:24 PM on February 21, 2010
IANAL but A asking B to pay on the basis of supporting them sounds like prior consideration. In jurisdictions that I know about (AU), this is not permissible.
Ethically, A should pay for all the reasons stated above. In my totally inadequate understanding of the law, A should pay.
A real lawyer for the appropriate jurisdiction is what you need.
posted by polyglot at 1:43 AM on February 22, 2010
Ethically, A should pay for all the reasons stated above. In my totally inadequate understanding of the law, A should pay.
A real lawyer for the appropriate jurisdiction is what you need.
posted by polyglot at 1:43 AM on February 22, 2010
If A expects the money to be paid back, they should also expect to share part ownership with B as B has now contributed and added value to the home. Be careful what you wish for, you just might get it...
posted by Jubey at 2:13 AM on February 22, 2010
posted by Jubey at 2:13 AM on February 22, 2010
The money was spent on the house, which A still owns. A should pay back the loan and move on. Don't be a jerk looking for an out. The whole 'support' argument is just lame, that's what being part of a relationship requires. Using that as an excuse just makes A look like even more of a jerk.
posted by wkearney99 at 5:44 AM on February 22, 2010
posted by wkearney99 at 5:44 AM on February 22, 2010
This thread is closed to new comments.
posted by Inspector.Gadget at 8:35 PM on February 21, 2010