Ex is getting the house, need legal help in Denver, Colorado
March 31, 2015 5:02 PM   Subscribe

My ex and I are trying to figure out how to transfer the house to her without me losing all of my equity. Unfortunately, she can't afford to just buy me out, and can't qualify for a new mortgage on the remaining loan balance if she's got a loan to me as well. I'm looking for recommendations on finding a lawyer to help vet a legal agreement, and any specific legal methods for making this happen. This is in Denver, Colorado.

A quick synopsis of the situation: we bought the house together ten years ago and I've paid for everything on it up to now. We separated three years ago and I moved out (no children, pretty amicable separation, etc), but I've kept paying the mortgage and any major repairs. My ex really doesn't want to move, and I'd like to not make her move, but I can't afford to keep paying on a house I'm not living in. Unfortunately, she doesn't have a very lucrative job and she can't afford to buy out my share, even if we just go by the decade-old sale price and not what it's appraised for now.

The current plan is for me to have a lien/deed of trust on the house for my current equity (roughly 1/3rd the value of the house, going by the original sale price), but no actual loan with a payment schedule, etc. Apparently the bank is OK with me having a lien on the place for the amount of equity I've got into it, but a loan per se would count against my ex's income and disqualify her. My ex and I have a verbal agreement that she'll start paying me back if she hasn't sold the house in a couple of years, but I recognize that it'd be legally unenforceable.

Clearly, I need to talk to a Colorado real estate lawyer about this, or other professional who understands real estate law in the area. Can anybody recommend a good local real estate lawyer, or somebody else who would be good to talk to about this? Maybe a title company? I'd prefer to avoid thousands of dollars in legal fees to do this, but hundreds of dollars would be (just barely) affordable.

Also, any suggestions on a different way to construct a deal like this would be welcome. I think we've landed on the only available solution, but I don't have a lot of experience with the ins and outs of property law and may not fully understand what's possible/legal/etc. Of course, I'll be running anything past my own lawyer or professional, so consider me fully disclaimed about taking advice from the Internet.

To pre-empt the fairness discussion: I know that I'm getting the short end of the stick here, and it's at least somewhat likely that I may not see any of the money I've got into the house ever again, especially if my ex decides to not sell the place, or if things turn sour. The reasons why are complicated and emotional, and I don't want to get into them here. I would really like to protect the equity in the event of a sale or foreclosure, or my ex passing away suddenly, or an insurance incident, but the priority is to transfer the house to her so a) she doesn't have to leave and b) I don't have to keep paying the mortgage.
posted by hackwolf to Law & Government (11 answers total) 1 user marked this as a favorite
 
Is there a particular reason that you can't just rent the house to her for the amount of your mortgage? Even if it's more than she can take on herself, she can then get a housemate. That seems like an immediate and basically cost-free solution that lets her stay in the house while you maintain your financial interest in the property.
posted by aiglet at 5:17 PM on March 31, 2015 [7 favorites]


I have a feeling I'm entirely misunderstanding what you're trying to do.

Do you actually have any equity in the house? In other words, if you sell the house right now at a price the market can bear (which is not the original sale price), will the amount exceed the amount necessary to cover the mortgage and all fees associated with the sale?

my current equity (roughly 1/3rd the value of the house, going by the original sale price)

This is a meaningless statement. The value of the house is not determined by the original sale price.

Also, any suggestions on a different way to construct a deal like this would be welcome.

If you have equity in the house, then you should not be paying attention to the sale price of the house. If you don't have equity in the house, then I don't understand how you can make any deal with your ex-wife because you have nothing of value to give her, and she would be accepting liability for something that has negative value to her. In other words, it'd be a one-sided contract with no benefit to her, which she should both not accept, and would be difficult to defend in court.
posted by saeculorum at 5:20 PM on March 31, 2015


I wonder if a rent-to-own contracts might work? Definitely find an attorney with real estate expertise. My awesome broker was Russ Murray: buyerbroker-denver.com/ tell him I sent you, he might have a name
posted by nickggully at 5:21 PM on March 31, 2015 [2 favorites]


a) she doesn't have to leave and b) I don't have to keep paying the mortgage.

One way to do this could be her exchanging her interest in the house for a very long-term lease, perpetually renewable, with an option for her to buy you out at a relatively low price once the mortgage is paid off. You'd get the money you paid towards the mortgage in exchange for equity, and she'd get to keep the equity she paid into the home while you were the sole legal owner. Basically, a rent-to-own type thing, which I understand is a relatively common thing.

There's no real reason why your options here are "paying the whole mortgage" or "having no ownership interest". I know you want to keep her in the house, and that's fine, but if she can't actually afford to pay the mortgage, you'll both lose the house.
posted by internet fraud detective squad, station number 9 at 5:22 PM on March 31, 2015 [2 favorites]


If you have been making payments on the house for 10 years and the local real estate market hasn't simply tanked, you likely have substantial equity in the house. Given that she can't afford the house, you should seriously consider selling the house and splitting the lump sum equity payment you will get. This is very often the solution that happens in situations like this.

I know you want to be a nice guy here, but if you can't afford to give her a free ride and she can't afford to pay for the house, then that may simply not fly. It would be better to get the equity out now (rather than, say, lose it to foreclosure). It would put money into her not very well off hands and also help cut ties between the two of you. She can take her lump sum and try to buy a house she can afford on her income -- or do anything else she so chooses to do with it.

I will suggest you get a copy of "How to get out of debt, stay out of debt and liver prosperously." One of the chapters basically recommends that in situations like this one, the best thing to do is go ahead and sell the thing that has equity that will fix the financial piece but that you are resisting selling for some kind of emotional reason or other.
posted by Michele in California at 5:37 PM on March 31, 2015 [4 favorites]


Sometimes after a divorce the best you can do is to get the house out of your name. You can get your lawyer to draft papers saying that the house must be refinanced to be in her name within 6 months (or a year if you want) or sold if not, and provide a quit claim deed to facilitate things. You should stop paying for anything to do with it now. You might need to loan her money to get it refinanced, but it might be worth it long-term. After all this then you will be free and can eventually buy another house.

It is unlikely you will get anything out of it and probably not worth trying, even just the fees for selling and staging and maintenance etc from her and/or her lawyer will pile up quickly.
posted by meepmeow at 5:38 PM on March 31, 2015


Information about how to find an attorney is available on the MeFi Wiki Get a lawyer page, including a link to a searchable directory for the American College of Real Estate Lawyers.
posted by Little Dawn at 6:11 PM on March 31, 2015


If your priority is to stop paying the mortgage, close this off, let her stay in the house and shut down immediate risk then yeah, I'd go with the lien. You will get your money back if she sells and if she doesn't -- well, you know where she is, and you'll be able to reach her if you want to push her to start paying you back.

I think your priority should be to legally close this off. It's not a good idea to have debt in your name, and responsibility for a house you don't control. Until the ownership question is settled you're in a risky position -- real estate could crash, the house could burn down, she could let it fall apart, someone could have an accident there. You do not want to be responsible for any of that.

I would aim to get a signed agreement that she'll start to repay you on a particular date. Even if it's not legally enforceable (or you can't afford to enforce it) it will give you some moral leverage, and it's possible she will take it seriously and start working towards a repayment plan, with roommates or an extra job or something.
posted by Susan PG at 7:11 PM on March 31, 2015 [1 favorite]


Thanks for the responses so far, everybody. I think that I have not worded this as well as I should have, so let me say that at this point, I'd like to focus on real estate savvy lawyer recommendations in Denver and/or Adams County rather than alternatives to the situation.

Thank you to those suggesting renting - that was the first option I tried, but it didn't work for personal reasons that I just don't want to get into. Either she gets the house in her name, and I'm out of the picture, or the house gets sold.

saeculorum, I'm sorry, but I think you're correct in that I didn't communicate what I'm trying to do sufficiently well. Suffice it to say that I know what equity means, and I have a lot of equity in the house (not quite six figures, but closer to that than five). My ex has no equity in the home as measured by input, I've paid for everything, but she's the one living there, and her name is also on the deed.
posted by hackwolf at 7:16 PM on March 31, 2015


You want her to own 2/3, refinance the mortgage in her name only, and you have a right to 1/3 of the equity, is that correct?

You'll definitely need a Colorado real estate attorney, but in the mean time, some concepts to google are "equity share" and "tenants in common."
posted by yarly at 7:58 PM on March 31, 2015 [1 favorite]


yarly: That's exactly right. Thank you for the keywords, an equity sharing arrangement looks like it might be a viable alternative to a lien that my ex would find acceptable.
posted by hackwolf at 8:42 PM on March 31, 2015


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