Selling the House DH bought with BM...and still owns with her! QUESTIONS!
I've brought up the topic here before, but now this is an actual real deal that is happening! History: BM and DH bought a house and lived there together for under a year before she moved out. I moved in four years ago. Since I've moved in, we've updated almost everything (flooring, trim, doors, windows, paint, appliances, etc.). We have an opportunity to buy our dream home from someone we know, and we have just gotten pre-approved for it.
Option A (Selling the House)
The housing market is very hot in our area, especially for homes in our price range -- we expect that we will make around $15k profit, of course that is total not minusing out closing costs and such. We understand BM is legally entitled to half the profit. Is this mandatory? Will we just be written out a check that they both have to sign and then it's up to them to split the money? Or would there literally be 2 checks with the profit split in half, one for DH and one for BM, so it would totally be up to BM whether she gave us her half or not? She's not very bright, so we don't think she would realize half the money is hers if she didn't get her own check. 
We are planning to get a free consultation from a lawyer to talk about whether we could fight her for her half of the money...we have been told that we could prove she didn't put anything into the house monetarily or work-wise to increase the value, ever since she's owned it.
Option B (BM buying/refinancing the house):
BM has talked about "moving in" when we move out. She told SD8 yesterday that she's moving in...of course we have made it very clear she would have to refinance it, to get our names off of it. My question is, in this case, since we have put work into it and the value has gone up, what happens to the profit we'd otherwise get from selling it outright? Would we benefit from this at all? She would basically be "buying us out" right? So could we still expect to get some money from this transaction to use towards our down payment on the new house?
And yes, we have asked her to sign a quit claim, to which her dad told her not to - it's helping her credit that we are making payments.
Thank you for any words of advice!
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I would think that you can
I would think that you can deduct 50% of the improvements from her 50% of profits to help with the re-coup of what you have put in to the home.
What does your DH's divorce decree say regarding the home? Does it say she gets 50% of the profits? If she buys you out she does have to pay fair market value so that would mean that you could still make a little on the deal.
They were never married -
They were never married - sorry I forgot to mention that. So no divorce papers or anything regarding the home when they split.
hmmm... I am not sure then.
hmmm... I am not sure then.
If she walked away and has not contributed to the homes maintenance or taxes or anything in 3+ years, she might not have any ground to stand on. But on the flip side she might refuse to sell... and you can't make her sell if she doesn't want to. I learned that the hard way with my exH.
It might be worth it for your
It might be worth it for your DH to offer BM a little cash in exchange for signing the quit claim...but have all the papers ready when he calls her to come over and talk about it, don't give her time to talk to her daddy about it...have a check ready and the papers ready and tell her "If you sign this right now I'll give you X" Greed usually wins out and she'll want to take the money you offer.
I like that idea, good
I like that idea, good point!!!!!!
Doesn't it all come down to
Doesn't it all come down to whether her name is on the deed or not? (The deed, NOT the mortgage loan, is what counts.) If it is, then it is half hers. The whole house, not just the profit. If she doesn't agree to selling it, then there won't be a sale. If she wants to move into it, she can, and I don't think there is any way to COMPEL her to pay you a dime. IMHO, of course, I'm not a lawyer or a RE expert, but this is a bite-you-in-the-butt scenario if I ever saw one.
Every state handles real
Every state handles real estate transactions differently. Her in California, everyone who's name is on the title will need to sign papers to sell the property. Several of these papers will show the current loan amount, appraisal, transfer fees, etc along with the sales price and moneys due to the seller after the sale.
Proceeds from the sale can be issued by a check, several checks to different parties or wired directly into a bank account. So it really depends on how naive your BM is in regards to paying attention to what she is signing.
If she would like to move in, she will need a new loan in her name only. (assuming she us willing to do this in order to get DH off the hook, and all future equity becomes hers) You can adjust the sales price to reflect 1) your improvements 2) new value 3) agreed upon price that is advantageous to each if you ( the higher the sales price the higher the transfer taxes and property taxes will be).
Alternately, she does not have to sign anything. The house is legally half hers. Depending in how title is held, if something happens to your DH, the entire home could legally be hers so this is definitely something your DH needs to address. If she is willing and able to make the full payments and wants to mo e in but does. It have the ability or desire to obtain a new loan in her name, then the home will still belong to both parties including: liability, tax consequences, potential and future equity and everything else.
This is definitely something that needs to be addressed in one way or another.
Thanks everyone for the
Thanks everyone for the thoughts. I'm totally not sure what will happen here....BM can be very lax about thigns sometimes and at other times totally surprise us with how much she cares about something, regardless of how truly important things are. It appears that BM is planning to go to the bank this week to figure out if she can be approved to refinance...so basically we don't have a choice in the matter, if she does.
My understanding, after researching a bit, is that if there is about $20k in equity, we subtract the closing costs, split that in half, and we would get that money.
And I just have to say this because it's funny....who the hell wants to move into their ex's house that he's been living in with his wife and family for 4 years? ha!