Expert: liznarr - 8/28/2007

Question
My boyfriend and I are separating and we have a house with the mortgage in both our names. If he wants to keep the house how do I go about handling this so that I will be compensated. Thanks

Answer
Hi Carlene,

In addition to receiving your share of the equity in the house, you have another issue to resolve if your boyfriend wants to keep the house:  Removing your name from the mortgage.

To determine the fair market value, you and your boyfriend should agree on a fair market value.  If you cannot agree on a figure, have an appraisal done.  If either of you disagree with the appraisal, make sure that UP FRONT, and before any appraisal is done, you have named a second and third choice of appraisers.  

If you do not agree with the first appraisal, move to a second.  Finally, you might need a third appraisal as a “tie-breaker,” or you could take an average of the three.

After you agree on the fair market value of the house at the current time, deduct the principal balance owed.  Fifty percent of the difference would be your share due you.  

In addition, I would think that if one or the other of you made a larger down payment than the other, that would need to be factored in somehow.  Don’t overlook one-half of whatever amount is also in any escrow account that the lender is holding.

Once the magic figure is arrived at, make sure you receive your portion in certified funds before you deed your interest over.

On having your name removed from the mortgage, this is EXTREMELY important for you if the two of you are severing all ties.  

Your boyfriend should contact the lender and submit whatever paperwork the lender requires of him to qualify for the mortgage independent of you.  Once he has been approved by the lender, make sure that proper documentation is filed and recorded of record, evidencing the fact that you have been legally removed from the mortgage.  Otherwise, should your boyfriend ever make late payments or default on the mortgage, you would be legally just as liable as he.

Hopefully, your boyfriend will qualify on his own to make the payments, but if not, you have a totally different situation to deal with.  He could get someone to co-sign with him, or the house might have to be sold.

I hope the above information is helpful to you.  Good luck to you, and write again if you have additional questions.

Regards,
Elizabeth