Co-Owner Wants Money to Give Up Her Interest in Our Home

My question involves real estate located in the State of: Michigan

My fiance and myself purchased a home three months ago and both are on the deed and mortgage equally as joint with the right of survivor. Unfortunately, shortly after the home purchase my fiance did not like the idea of being tied to the home and moved out. We decided to wait a few weeks to let things settle before we decided how to proceed with the house. My fiance told me I could keep the house as long as I refinanced the home in solely my name and she would sign off on the deed. Originally, she did not want any funds in exchange, she simply wanted her commitment to the home ended, after all my investment was much larger into the house then hers. I went to the bank and started the refinance process, paid for a appraisal and contacted the title company to start preparing the documents, I am now in the final stages of the process and expect to close in the next few weeks. Now, my fiance is changing her story and wants money before she signs the quit claim deed at closing. The problem is that since we have only lived there three months there is not much equity, I do not have the funds to give her a buyout since I have paid the expensive costs of the refinance. She understands this and is asking me to sign a statement with a amount that we can agree on that states I will pay her the funds overtime. I am very reluctant to sign the document and have suggested that I will sign the document at closing as it is my fear she will not show up to closing, leaving us back to square one. What are my rights, I feel this is extortion in a way. what is some advice for a fair settlement so this can be resolved??? Thank you for your time.

You are going to learn that marriages are easier to get out of than houses and mortgages.

There's no such thing as survivorship rights on mortgages you both are likely individually and together responsible for making sure the mortgage gets paid. You should point out that if you stop paying the mortgage tomorrow *HER* credit will take a hit for both the delinquency and the foreclosure. (At least Michigan appears to be a non-recourse state so they won't sue her for any resulting deficiency). You should point out that since there's no equity, your options are to either have her deed it over at the time of the refi, or you'll be forced to walk away.

Your other option is to sue her but that is going to cost big $$$$.

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Quoting mromanow

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My question involves real estate located in the State of: Michigan

My fiance and myself purchased a home three months ago and both are on the deed and mortgage equally as joint with the right of survivor. Unfortunately, shortly after the home purchase my fiance did not like the idea of being tied to the home and moved out. We decided to wait a few weeks to let things settle before we decided how to proceed with the house. My fiance told me I could keep the house as long as I refinanced the home in solely my name and she would sign off on the deed. Originally, she did not want any funds in exchange, she simply wanted her commitment to the home ended, after all my investment was much larger into the house then hers. I went to the bank and started the refinance process, paid for a appraisal and contacted the title company to start preparing the documents, I am now in the final stages of the process and expect to close in the next few weeks. Now, my fiance is changing her story and wants money before she signs the quit claim deed at closing. The problem is that since we have only lived there three months there is not much equity, I do not have the funds to give her a buyout since I have paid the expensive costs of the refinance. She understands this and is asking me to sign a statement with a amount that we can agree on that states I will pay her the funds overtime. I am very reluctant to sign the document and have suggested that I will sign the document at closing as it is my fear she will not show up to closing, leaving us back to square one. What are my rights, I feel this is extortion in a way. what is some advice for a fair settlement so this can be resolved??? Thank you for your time.

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How much money did you each put towards the purchase of the home?

combined together we put $15,000 down, I put $12,000 and she put $3,000 down. Her defense is that she paid an additional $5000 in improvements. My defense is that was her decision on the improvements and she thinks she should be reimbursed for her investment.

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Quoting flyingron

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(At least Michigan appears to be a non-recourse state so they won't sue her for any resulting deficiency)

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au contraire.


Up until very recently, many deficiencies allowed for a lenders recourse.

there is new legislation as of Mar 2012 that limited recourse in some situations.


I haven't read much of the law nor do I have the OP's specifics to be able to apply it anyway but y'all are welcome to take a stab at it.


http://www.legislature.mi.gov/(S(kgf...Act-67-of-2012

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Quoting mromanow

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combined together we put $15,000 down, I put $12,000 and she put $3,000 down. Her defense is that she paid an additional $5000 in improvements. My defense is that was her decision on the improvements and she thinks she should be reimbursed for her investment.

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So, she put 8k into the house that will benefit you, but not her. I can see her point. I am not sure how it would all work out if it had to be fought out in court, but I do see her point. I am sure that you wouldn't want to walk away from your 12k investment either.

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Quoting mromanow

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combined together we put $15,000 down, I put $12,000 and she put $3,000 down. Her defense is that she paid an additional $5000 in improvements. My defense is that was her decision on the improvements and she thinks she should be reimbursed for her investment.

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and I agree with her. Whether you have immediate benefit from the improvements or a future benefit as it increased the value of the house, I think she deserves to be paid for all of her investment.

Of course, if you want to spend a bunch of money in attorneys fees to argue it out and then still likely paying her something, have at it.

What would a fair settlement be? i'm not looking to screw anyone over here I agree their should be a settlement but at the same point and time, I am paying for a refinance that wasn't my choice..

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Quoting mromanow

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What would a fair settlement be? i'm not looking to screw anyone over here I agree their should be a settlement but at the same point and time, I am paying for a refinance that wasn't my choice..

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the refinance is for your benefit.

You could just leave it as it is and she will continue to accrue increased value as you make payments and the market grows if you don't really want to settle this.

so, where does she benefit from the refinance/

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Quoting jk

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au contraire.

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Au contra ire yourself. While technically there is technically recourse, it is not for the legislation you are grasping at, and EFFECTIVELY it is a non-recourse state, because the lender will most likely bid what they have in it, which under Michigan law pretty much precludes any further action on their point.

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I haven't read much of the law nor do I have the OP's specifics to be able to apply it anyway but y'all are welcome to take a stab at it.

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Apparently you haven't read any of it. The first sentence makes it clear it applies to commercial properties only. Second, this law doesn't CREATE a recourse, it takes away the solvency recourse to what was understood to be a non-recourse loan that occurred due to a fairly recent court decision.

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Apparently you haven't read any of it. The first sentence makes it clear it applies to commercial properties only. Second, this law doesn't CREATE a recourse, it takes away the solvency recourse to what was understood to be a non-recourse loan that occurred due to a fairly recent court decision

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I know it does create recourse. Didn't say otherwise. My point was it was addressing the issue although I did not realize it was specifically addressed to commercial loans.

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lyingron;760765]Au Contraire your self. Residential loans are still non-recourse.

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where are you getting that from? Everything I find says otherwise. I cannot cite the case but I recall reading a decision involving the amount of the deficiency, not that it was or was not eligible for recourse.

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from
http://www.nclc.org/images/pdf/forec...eam-report.pdf

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The following twenty-one states have enacted
laws that require mortgage holders to use the fair
market value as the basis for calculating a defi-
ciency debt after a foreclosure sale in most home
foreclosures:

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Michigan (non-judicial)

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if there is no recourse allowed, why would they pass a law speaking to the valuation of the property in a recourse action?

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Quoting flyingron

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Au contra ire yourself. While technically there is technically recourse, it is not for the legislation you are grasping at, and EFFECTIVELY it is a non-recourse state, because the lender will most likely bid what they have in it, which under Michigan law pretty much precludes any further action on their point.

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Aw, Ron, you edited your post.

So, in other words, it IS a recourse state even though the laws in place affect the valuation of the property for the purposes of the amount sought in the recourse action.

I'm getting it from reading the statute and a couple of legal reviews of the statute. It says right in the first line COMMERCIAL and talks about the solvency issue which was driven by the Wells Fargo v. Cherryland Mall issue where a recourse provision was being forced on the allegations of the principals lapsing into insolvency on what otherwise appeared to be a non-recourse loan. It ha nothing to do with anything in this thread.

Yes, I edited my thread. Initially I said it was a non-recourse state, which isn't strictly true. While there is a recourse, it's generally unavailable in most cases. There exists the Full Bid Credit Rule. They can only obtain the deficiency over what they bid on the property. If they bid what they have in it (common) then they get no ability to pursue any deficiency. Try googling that phrase before you purport to take me to task.

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Quoting flyingron

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I'm getting it from reading the statute and a couple of legal reviews of the statute. It says right in the first line COMMERCIAL and talks about the solvency issue which was driven by the Wells Fargo v. Cherryland Mall issue where a recourse provision was being forced on the allegations of the principals lapsing into insolvency on what otherwise appeared to be a non-recourse loan. It ha nothing to do with anything in this thread.

Yes, I edited my thread. Initially I said it was a non-recourse state, which isn't strictly true. While there is a recourse, it's generally unavailable in most cases. There exists the Full Bid Credit Rule. They can only obtain the deficiency over what they bid on the property. If they bid what they have in it (common) then they get no ability to pursue any deficiency. Try googling that phrase before you purport to take me to task.

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It says it right here:

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NONRECOURSE MORTGAGE LOAN ACT
Act 67 of 2012
AN ACT to regulate the use and enforceability of certain loan covenants in nonrecourse commercial loan transactions in this state.

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on this page:

http://www.legislature.mi.gov/(S(tkf...act-67-of-2012

and yes, I admit I did not read the summary in the title section.

so sue me!!!;)
just kidding. Yes, I missed it. I got to that through links to specific sections of the law. Once you pointed the commercial application out, I went and started at the beginning and saw the statement.

and I understand your statement and am not arguing with it but having read a decision regarding just such a situation, I knew, barring recent law, there are situations that allow for a claim for the deficiency.

the rule you speak of would be statute


http://www.legislature.mi.gov/(S(g0k...e=mcl-600-3280

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such sale either directly or indirectly, and thereafter such mortgagee, payee or other holder of the secured obligation, as aforesaid, shall sue for and undertake to recover a deficiency judgment against the mortgagor, trustor or other maker of any such obligation, or any other person liable thereon, it shall be competent and lawful for the defendant against whom such deficiency judgment is sought to allege and show as matter of defense and set-off to the extent only of the amount of the plaintiff's claim, that the property sold was fairly worth the amount of the debt secured by it at the time and place of sale or that the amount bid was substantially less than its true value, and such showing shall constitute a defense to such action and shall defeat the deficiency judgment against him, eit

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In short, their claim is limited if their bid was below fair market value. The difference between the selling price and fair market value must be used as an offset to their claim.

But given the fact so many homes are underwater, that changes the situation greatly.


but also notice that does not apply to all foreclosures:

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This section shall not apply to foreclosure sales made pursuant to an order or decree of court nor to any judgment sought or rendered in any foreclosure suit nor to any chancery sale heretofore or hereafter made and confirmed.

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You will benefit immensely from obtaining sole ownership now rather than waiting until equity is in place from your payments. In ten years, her 1/2 will be worth much more.

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Quoting mromanow

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What would a fair settlement be? i'm not looking to screw anyone over here I agree their should be a settlement but at the same point and time, I am paying for a refinance that wasn't my choice..

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it's a negotiation not a settlement. she has no obligation to go along with this at all, if she chooses not to you can file a motion to partition which would lead to a court ordered sale however this may not be an option unless the lender agrees to it.

as it is right now she has something you want and she wants $8000 for it, you can try to convince her to sell it for less but you cannot force her to do so.

As was mentioned above you can try to negotiate for a lower amount to pay her, if she won't agree to a lower amount then you can always play poker with her and mention that you can't pay that and you'll both have to sell the house and take the lose together. It's risky but if you don't want to pay her requested amount then it might make her rethink her position.

Are any of the improvements removable, ie is she claiming she paid for the curtains? You can always offer to return items that are removable to her.

If you think she will just blow off the closing, you have a couple of options that might increase your chances of her showing up.
Again play poker and let her know that if she doesn't show at the closing you won't have the money to restart the process so you'll sell and you both will lose out in the end.
See if there is anywhere you can borrow some money to pay her a partial payment on the owned amount. So in your agreement you will pay her $1000 at the time of closing and signing off on the transfer, that way there is a monetary inducement for her to show.

So how much do you think you owe her and have you offered any amounts between what you feel she is owed and what she wants or are you both just sticking to your original values with no compromise on either end?

My ex came up with a number of $5,000. The breakdown is $3,000 back in her down payment, $1,000 for improvements and $1,000 for mutual furniture we purchased jointly. I countered with $4,000 and she can have the furniture. I have not heard back regarding my offer. My concern is that the appraisal came back for $1,000 more than the refinance of the home so there is not much equity but the home was just purchased three months ago. Do I pay the difference in equity or my offer...

You pay whatever the negotiated buyout is.

If I was in her position, I would be looking for:

$3k for down payment
$1k for improvements
$5k pita payment*


I wouldn't involve the furniture as it really has nothing to do with it









* pain in the ass payments- you can look at that either way; either she thinks you have been a pain in the ass or she is going to be a pain in your ass and make a demand just because she can. pita payments are always negotiable but are very closely indexed to how much you kiss butt or piss her off.