[quote frenchlambda]I used these $85K towards the down-payment for the property. Since 75% of the total down-payment came from money I had acquired outside the marriage, it is my understanding that I would get 75% of whatever equity was in the house at the time of dissolution.[/quote]
But the “marriage settlement” changes this.. to you getting all of the assets and liabilities out of the marriage (see what you wrote @ http://piggington.com/exinlaws_3rd_party_creditors_want_to_foreclosed_on_my_condo#comment-185278 under “COMMUNITY RESIDENCE” ). This means that if the above was the intent, then there was no purpose in the “stipulation and order” because the marriage settlement already took care of it and only caused you to sign away a right.
Husband shall be awarded, without offset, his separate, Wife’s separate and the community’s interest in the residence located at (address), subject to any and all encumbrances, including but not limited to the interest held by (ex-wife’s parents).
There was no purpose surrendering the deed of trust in order to get her signature.
During divorce, both parties share in the gain and any loss, adjusted for before marriage assets brought in from either side. The ex-in-laws loan was also not an arm-length transaction. Since you mentioned $85k as your 75% into the down from pre-marriage assets, that means that she brought in 25% or about $28K? The statement:
Since 75% of the total down-payment came from money I had acquired outside the marriage, it is my understanding that I would get 75% of whatever equity was in the house at the time of dissolution.
Usually gains are split evenly (California is a community property state) after pre-marriage contributed assets are subtracted. There is a more complicated way to do the divvying, but usually this would involve a pre-nup and valuating pre-marriage contributed assets over time, probably at an implied zero risk rate of return.
From a financial accounting point of view, pre-marriage assets contributed to a marriage are considered a liability as well as an asset. They have to be considered on dissolution of marriage. I am assuming that you bought the property originally for around $443K?
This means
assets = $443K (in property, form of condo)
liability = $28K(wife’s pre-marriage contrib) + $85K(husbands pre-marriage contrib) + $200K(from inlaws) + $130K(bank loan)
Property drops by $100K in value, meaning that you have a shared deficit of $100K. Split 50/50 means that you both have deficits of $50K each. Balancing that with the amount paid in from pre-marital assets, means that she is in negative territory to the tune of $50K-$28K or owes $22K. Your position ends up being $85K – $50K = $35K. Both of you lost $50K of asset value (shared loss – community property) when comparing pre and post marriage. This is basically the calc that would have been done if the property had been sold, and should have been done when dealing with the marriage settlement. (I initially thought the 85K was for something else, not related to property brought into the marriage.). NOTE: the cost of the divorce is also generally shared…
Now considering that it is all mostly water under the bridge because things have been signed, consider the above as educational material. Also: be careful of signing anything related to community property or disputed community property outside of the marriage settlement(As the “stipulation and order” and “deed of trust” did.)
There is an interesting quirk in the “stipulation and order” in that you may still have a right to have the $85K reimbursed. The way it was written does not tie it to the value of the property(condo), but from who? This is where an attorney might be useful. Oddly, you might be able to have the full amount assessed against the wife’s current assets and use that to reduce what is owed to the ex-in-laws (loan was not arms length). Does the “marriage settlement” mention anything with respect to this specific $85K? The only problem I see is the “without offset” in “Husband shall be awarded, without offset, his separate, Wife’s separate and..”. The whole thing seems quite messy in terms of the docs.. (gives me a queasy feeling. My German-Scottish background likes everything in order.)
** I wonder if anyone on this board knows a good attorney, particularly in the area of property, assets and marriage/divorce. An attorney needs to take a look at this mess (not one looking to charge as many hours as possible, or pad their hours). Maybe I am out of touch with today’s prices, but I don’t think frenchlambda got much for his $13K for restraining order and arbitrated divorce. The paperwork is too messy. If I am out of touch with today’s prices.. then I definitely went into the wrong field 8-P.
