Her Parents Gave Us Money, But I Made Payments: Who gets the House?

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Houses are the biggest purchase most of us make in our lives. Because of that, they’re often key pieces of divorce settlements. With the cost, equity, and other factors, they’re also one of the most complex assets to deal with.

Rick Jones, one of our founding partners, regularly appears on the Danny Bonaduce and Sarah Morning Show, where he takes family law questions from listeners. One recent caller finds himself in a common situation.

His in-laws gave he and his wife, their daughter, the down payment for a house as a gift. Since then, he’s been the one making payments. His question is: how does this impact who gets the house in the divorce?

Related Reading: Sweat Equity and Divorce Settlements

Who Gets The House? Listen to the answer below:

Caller: “My wife and I have been married for about five years. Things are not going that well, as happens. We own a house together. Her parents gave us the down payment for the house when we got married as a wedding present and I have been making the payments on the house ever since. I would like to keep the house. You know, real estate market being what it is. I’m just curious if I’m able to do that when we split up.”

Danny:There’s a bunch of stuff going on there if I’m not mistaken. My knee jerk reaction was, ‘Oh, buddy,’ But the second part is, ‘Couldn’y he buy that house?'”

Rick: “Well, there was a twist and a turn there. It’s a mixed bag a little bit. The good news is that one of you is able to keep the home. The last resort obviously is for you to order a sale, because both of you would eat the cost of sale associated with it. So now the question is a couple of things:

“Do either of you have a better opportunity? Can you argue that it’s separate property? The fact that you’ve been paying the mortgage, unfortunately, doesn’t help you, that’s not a feather in the hat.”

Danny:It doesn’t help him get any of that?

Rick: “What you’re paying it with is community funds. It’s his own income. It’s something that’s shared and shared alike between the two of you. Now my concern is for the down payment. To the extent, it was truly a gift from the parents to husband and wife then you’re okay.

“Unfortunately, when you get into a divorce situation, sometimes truth morphs a little. So it may very well come out that the parents were ‘loaning this’ or giving it ‘to their daughter.'”

Danny: “So if she fights, she’ll probably get that house then?”

Rick: “Well, I would say this. Even though that separate property argument exists for her, the biggest issue is which of the two of them are most in a position to continue to fund the home? Because if there’s any equity, understand that if you’re keeping the house, you’ve got to cash the other person out.

“To the extent that Mike is the breadwinner in the family, then yeah, he’s got a better opportunity of keeping it because not only will he be able to cash out, but he’s able to fund the house going forward.”

Related Reading: Dividing the Home in Divorce

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