April 2010 Newsletter
Table of Contents
1. Dividing the Family Home in a California Divorce
2. Expert Answers Questions on Short Sales, Deeds
3. Role Reversal: Ex-Wives Angry Over Paying Alimony
4. Make Money While You Sleep
5. Free Teleclass
6. Divorce Humor
7. Thought for the Day
1. Dividing the Family Home in a California Divorce
In an article by a California Attorney, she says the following:
Things You Will Need
It would be helpful to have a copy of the deed to your family home
so that you both know exactly how the title to the home is held.
Step 1
For the sake of simplicity, I will assume that the family home is
located in California and it was purchased and maintained with community
funds so that the home is 100% community property.
In California, the family home is often divided in one of the following
three ways:
1. The home is sold immediately and the net sales proceeds are
divided equally between the parties. This will work if there is
enough equity in the home to pay for the sales costs. (Equity means
that the amount you can sell the house for is more than the amount
owed on the house.)
2. If there is little or no equity in the home, couples may continue
to own the house until the real estate market improves to the point
where there is equity in the home. If you wait to sell the home,
consider putting the title in the names of each party as "tenants
in common". This form of title gives each of you the right
to give away your share of the home to someone in your will. It
is also important that you decide in advance:
a. Who will live in the house until it is sold.
b. What event or date will trigger putting the house up for sale.
c. What percentage of the net sales proceeds each of you gets once
the house sells.
3. One spouse buys the other spouse out of their interest. For
example, if the house is appraised at $150,000. and there is a mortgage
of $50,000., the equity is $100,000. In this example, one spouse
will have to pay the other spouse $50,000. in cash or trade. This
could also be accomplished by having one spouse refinance the house
(on their credit alone) and using the money to pay off the other
spouse.
Happily, the transfer of the home (rather than its sale to a third
party) has no tax consequences when it is part of a divorce settlement.
But if one party gets the house, they also get the responsibility
for any potential tax liability for capital gains taxes plus any
real estate commissions when the home is sold.
2. Expert Answers Questions on Short Sales, Deeds
This is from an on-line article originally printed in the Arizona
Republic.
Real estate attorney Christopher Combs answered reader questions
during an online chat.
Question: Can you have a short sale on your house even if
you are current on all of the payments? What are some of the requirements
for a short sale?
Answer: For most lenders to approve a short sale, you should
be more than 60 days delinquent. Other requirements include completing
their short-sale package.
Q: We are currently "upside down" on our home
with an equity loan. There is no mortgage. We have a beneficiary
deed leaving our home to our two children. If we die while the house
is still in this situation, would the kids be responsible for the
equity loan against the house?
A: The general answer is yes, your children would be responsible
for the equity loan against the house. Death will not erase the
debt.
Q: My wife and I are going to divorce. We currently own
a home together that we will need to decide how to handle. The house
is currently upside down and the banks will not refinance and we
cannot sell. What is the best course of action?
A: You and your soon-to-be ex might want to figure out how
to pay the mortgage until the home increases in value. If you can't
sell it and you can't pay the mortgage, the home will go to foreclosure.
If the loans from banks were used to purchase the home, there is
no deficiency after foreclosure.
Q: My sister put me on a beneficiary deed, and she passed
away. I recorded the deed in my name (not on the loan) to be able
to sell the property. Unfortunately, no buyers. The property is
now in foreclosure. What, if anything, am I responsible for? Since
I'm not on the loan, am I responsible for the taxes? How do I get
my name off the deed?
A: You are in a difficult situation. The property may have
to continue in foreclosure, but you should take responsibility for
maintaining the property in the meantime to avoid any personal responsibility
for your sister's estate. You have no personal liability for real-estate
taxes. Your name will come off the deed after the foreclosure is
completed.
Q: If my fourplex is foreclosed on and taken back by the
bank, can the bank issue a deficiency judgment against me? And is
the forgiveness of indebtedness considered ordinary income on the
full amount of the forgiveness?
A: If your fourplex is foreclosed on and taken back by the
bank, yes, the bank can procure a deficiency judgment against you
because any deficiency protection only applies to single-family
or duplex properties. On the second question, the answer generally
no.
Q: What is the most efficient way to evict a residential
tenant?
A: First, you issue a five-day notice to the tenant saying:
"If you don't pay the back rent in the next five days, eviction
proceedings will be filed in court." On the sixth day, you
go to court and file eviction proceedings. The correct court depends
on the amount of rent due; go to your local Justice Court and they
will advise you.
Q: I recently had my house appraised and it came back at
a price of "50 bucks and a Slim Jim." When will real estate
be back to normal?
A: Things are tough out there. Basically we are going to
have to define a new normal. The old normal won't be back for a
while. It will be a long time before prices increase at an average
of 5 to 10 percent a year as they generally did over the past 15
years. Also, higher-end homes may take even longer to rebound to
2005 levels.
3. Role Reversal: Ex-Wives Angry Over Paying Alimony
The following article was posted on the ABC NEWS/Money website
and was written by Alice Gomstyn, ABC NEWS Business Unit.
He got their second house, an investment property she had bought
in Costa Rica, and a $96,000 annual alimony payment.
She got angry.
"It's so obscene," said Holly Chiancola, 52, a Gloucester,
Mass. real estate agent who is fighting the terms of a divorce settlement
ordered by a judge in 2006.
You used to hear about divorced men complaining that their ex-wives
were unfairly cutting into their income. Now, as more women become
primary breadwinners, the complaints increasingly come from them.
The number of American men receiving alimony has climbed, from 7,000
in 1998 to 13,000 last year, according to U.S. Census Bureau data
Chiancola's ex, who declined to comment for this story, is among
them. Thanks in part to the pre-financial crisis real estate boom,
Chiancola earned considerably more than her ex-husband, a sometime
carpenter and fashion model, during their 19-year-marriage. She
said her ex didn't hesitate to take advantage of that -- even though
her income plummeted after the real estate boom years, and she's
now struggling to make her mortgage payments.
Chiancola said she partly blames Massachusetts' "outdated"
divorce laws for her predicament -- she is a supporter of the group
Mass Alimony Reform -- but she's also plenty outraged at her husband.
"He went for the jugular, believe me," she said.
Aggressive pursuit of spousal support by men is becoming more common,
some divorce lawyers say, as the stigma of asking for alimony fades.
"Early on, men were somewhat embarrassed to ask for alimony
because it went across their defined roles in the culture. That
has diminished," said Marlene Moses, the president-elect of
the American Academy of Matrimonial Lawyers, an organization of
family law attorneys. "There's been a revolution of men and
their rights and the vigor with which they pursue legal opportunities
for themselves."
It's a revolution, experts say, that has been going on for more
than 20 years -- actress Joan Collins' divorce and alimony case
made headlines in the 1980s -- but today, it's still catching some
women off guard.
Take Terry, a 56-year-old Florida healthcare executive, who asked
to have her last name witheld because her divorce from her husband
is not yet settled.
"He's a very independent man, a very macho guy, and I was
quite surprised that he would ask for alimony," said Terry.
4. Make Money While You Sleep!
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5. Free Teleclass
Carol Ann will be hosting a FREE teleclass for your clients who
are going through divorce. It is called "5 Ways to Survive
Your Divorce Financially." The next free teleclass is scheduled
for Tuesday, May 4. Click
here for more information.
6. Divorce Humor
A dietitian was addressing a large audience in Chicago: "The
material we put into our stomachs is enough to have killed most
of us sitting here, years ago. Red meat is awful. Soft drinks erode
your stomach lining. Chinese food is loaded with MSG. Vegetables
can be disastrous to some and none of us realize the long term harm
caused by the germs in our drinking water. But there one thing that
is the most dangerous of and we all have eaten or will eat it. Can
anyone here tell me what food it is that causes the most grief and
suffering for years after eating it?"
A 75 year old man in the front row stood up and said, "Wedding
cake,"
7. Thought for the Day
Your results have been determined by your beliefs. Change your
beliefs and you will change your results.
---Larry Winget
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