Marital Property - House

[abc1234]

Need some help understanding my interest in regards to the house...My wife brought our house into the marriage.....the house was in her family for probably 7 years beforehand (it was pretty much given to us with however much the note was at the time)  We refinanced the house in 2002 and I was put on the mortgage of the house.  I pulled the mortgage the other day and realized that her mother is on the mortgage also...all three of us are (was not aware of that).....in terms of the deed, my wife and her mother are on that, I kick myself for not looking all of this over, but at the time it didn't seem like much of an issue....as you never see yourself going down this road.  We were not all present at the closing, we just went and signed the papers seperately....

I have probably paid 75-80% of all household expenses since we have been married.....since 2002 the house has probably doubled in value.....am I entitled to half, a third, 25%, or anything regarding equity in the house since then? 

I want her to be able to stay in the house (we have no children) but just would hate to think my money has gone into this house for the last 6 years and I would have nothing to show for it....we have incurred some debt over the last 3 years and that is my main concern....any thoughts would be greatly appreciated.....thanks

[Lee Borden]

Hard to say. I would think the judge is going to look at everything you and she own now, and everything you and she owe now, and try to do something fair. Don't expect any mathematical formulas, just head-scratching and "keeping it simple." And remember, the judge has no authority over a non-party, so you may want to discuss with your lawyer the possibility of interpleading your mother-in-law.

[CollegeDad]

I'm not a lawyer but I understood that typically you leave a marriage with whatever you brought into it barring any penalty for misconduct (like flagrant adultrery or physical abuse) during the marriage.  So, if the house was not yours to begin with and you bought no stake in the equity except what you paid on the mortgage during the marriage then the equity you are entitled to at divorce would be limited to what you could show that you've actually paid for. 

If what I suspect above is true, I believe a fair way that you would determine the amount of equity that belongs to you would be to give you credit for the reduction in mortgage principle from the time of loan inititiation to time of divorce by the percent of your monthly contribution toward the mortgage per month. For example, if the principle has been paid down by 10,000 dollars during the time that you were on the mortgage and your monthly contribution has been about 50% of the mortgage payment, then you should get 5,000 dollars of equity credit in the home.  If the home has appreciated in value since you've been in this arrangement by 100% then your 5,000 dollars equity credit should also appreciate to a value of 10,000 dollars.  You'll need an appraisal at the time the loan was initiated and one at or around the time of your divorce to show the appreciation.  I would think that your lending institution would have required an appraisal during the loan initiation process.  I believe an appraisal now days runs about 350 dollars. 

I don't know if you can prove how much you contributed each month on the mortgage (Did you keep check stubs or something?) but your name was definitely on the mortgage and I would think you should have a legitimate argument for some of that equity and resulting appreciation. 

If you didn't directly contribute toward the mortgage then I would think that you would need to look at you and your spouses relative incomes and try to infer that because you contributed to other household expenses you deserve credit indirectly. 

As far as your name being on the deed, I don't think that really makes much of a difference because this was where both of you lived and I would think be considered as a marital asset. 

[abc1234]

Thanks for all the input....

If I have not mentioned (and I don't know if that is understood) We live in the state of Alabama.  I am the only one really drawing an income and our tax returns show that, in other words, I make up close to 85% of our monthly income. 

There is probably about $135k in equity (mortgage, plus home equity loan with both of our names minus appraised value, there was probably about 60k built in when we refinanced back in 2002) in the house based on what the prices of the houses are going for around us.  Believe me, I'm not even looking for half of that or even a third really, just something that would allow me to move on with my life and not be just straddled with debt.  I realize that the house was there when we were married and I do respect that.  I think between the 2 of us we have about 40k in personal debt and about 35k in business debt due to some business ventures (where there is inventory involved, so how much is really debt?) that are still out there.  So kind of a complicated situation.  If we sold the house and paid off everything (excluding cars), there would be about 55-65 k still left over....so...I just don't know....just really confused...

I just would make me cringe to think that I walk away with nothing she turns around gets remarried and sells the house and recoups all the equity, for which I have contributed alot over the last 6 plus years upwards of 55k.....I want her to keep the house because of the sentimental value it has to her....so I am kind of torn....