Writing out a contract for splitting couples

[Joe Lujan]

Good afternoon all!

Here it is!

My daughter and her boyfriend of 3yrs are splitting up. They bought a house together. My daughter put down $30,000 all together with her own money for down payment and closing costs. He didn't put any money in. Neither on can qualify on their own to refi and buy the other out. His mother said she will help him keep the house since he refuses to leave. His mother will give my daughter $15,000 now and she is to sign a quit claim over to remove herself from title. Of course, Her name will be on the loan. Another $5,000 in 2024 and another $5,000 in 2025. total of $25,000. Which I think is stretching this ordeal too long. 

Numbers: Sold price: $520,000. House comps at about $545,000 so about $25,000 in equity. selling the house will short change her drastically.  I need suggestions on a FAIR contract that my daughter can present to her EX, that will work for both. 

All suggestions will be taken with great thanks!!

[Joe Homs]

@Joe Lujan I would be very careful here.  You may need an attorney to write this out, but to protect your daughter I would use a note and deed to a 2nd position with the terms of the note written out as you have described.  I would NOT "quit claim" the property over to him until this money is all paid back.  The minute she does that she loses control over the home.  At least this way she will still be on title and can hold his feet to the fire until she gets paid back.

Good Investing...

[Steven Foster Wilson]

Quote from @Joe Lujan:

Good afternoon all!

Here it is!

My daughter and her boyfriend of 3yrs are splitting up. They bought a house together. My daughter put down $30,000 all together with her own money for down payment and closing costs. He didn't put any money in. Neither on can qualify on their own to refi and buy the other out. His mother said she will help him keep the house since he refuses to leave. His mother will give my daughter $15,000 now and she is to sign a quit claim over to remove herself from title. Of course, Her name will be on the loan. Another $5,000 in 2024 and another $5,000 in 2025. total of $25,000. Which I think is stretching this ordeal too long. 

Numbers: Sold price: $520,000. House comps at about $545,000 so about $25,000 in equity. selling the house will short change her drastically.  I need suggestions on a FAIR contract that my daughter can present to her EX, that will work for both. 

All suggestions will be taken with great thanks!!

 If it is in her name then I would have her just sell it. That does not sound like a good deal that his mom is offering her. Plus, it is not him. I would try to sell it and be done with it. 

[Steve Vaughan]

Quote from @Joe Homs:

@Joe Lujan I would be very careful here.  You may need an attorney to write this out, but to protect your daughter I would use a note and deed to a 2nd position with the terms of the note written out as you have described.  I would NOT "quit claim" the property over to him until this money is all paid back.  The minute she does that she loses control over the home.  At least this way she will still be on title and can hold his feet to the fire until she gets paid back.

Good Investing...

Yep. $15k now and get a 2nd for the remaining $10k, then quitclaim. Then count her blessings.

A $525k loan with a $545k value = $0 equity by the time commissions and closing costs get done with them in a sale.  Probably have to come out of pocket.  

[Chris B.]

As mentioned,  do not quit claim until there is a successfully completed deal and get an attorney involved to create the contract.  That aside, your daughter will want to be off the loan also as any late or non payment of the mortgage will affect her credit and they can come after her if needed.

[Joe Lujan]

Quote from @Steve Vaughan:

Quote from @Joe Homs:

@Joe Lujan I would be very careful here.  You may need an attorney to write this out, but to protect your daughter I would use a note and deed to a 2nd position with the terms of the note written out as you have described.  I would NOT "quit claim" the property over to him until this money is all paid back.  The minute she does that she loses control over the home.  At least this way she will still be on title and can hold his feet to the fire until she gets paid back.

Good Investing...

Yep. $15k now and get a 2nd for the remaining $10k, then quitclaim. Then count her blessings.

A $525k loan with a $545k value = $0 equity by the time commissions and closing costs get done with them in a sale.  Probably have to come out of pocket.  

[Joe Lujan]

THANK YOU

[Branden Jordan]

Quote from @Joe Lujan:

Good afternoon all!

Here it is!

My daughter and her boyfriend of 3yrs are splitting up. They bought a house together. My daughter put down $30,000 all together with her own money for down payment and closing costs. He didn't put any money in. Neither on can qualify on their own to refi and buy the other out. His mother said she will help him keep the house since he refuses to leave. His mother will give my daughter $15,000 now and she is to sign a quit claim over to remove herself from title. Of course, Her name will be on the loan. Another $5,000 in 2024 and another $5,000 in 2025. total of $25,000. Which I think is stretching this ordeal too long. 

Numbers: Sold price: $520,000. House comps at about $545,000 so about $25,000 in equity. selling the house will short change her drastically.  I need suggestions on a FAIR contract that my daughter can present to her EX, that will work for both. 

All suggestions will be taken with great thanks!!

Why can't he give her half of her deposit back, and split the equity? I would not suggest hanging on for a couple more years. It keeps the splitting couple attached longer. It is a burden and headache unless they are very understanding and cordial with each other. I am a financial coach, and this is a common way to do things. Split everything that was mutual. Individuals get their money back.