1. Wife is assumed to be keeping the house, and she's living there, with the children.
2. Appraised value of the house is $120,000 (wife's appraisal) up to $140,000 (husband's appraisal).
3. The mortgage balance was $62,400 on June 1, 1996 (the day the complaint was filed), but it was $60,300 on November 1, 1996, the day of trial. It was $63,200 on April 1, 1996, the day the husband walked out, and the parties separated. (Note that this is important because the mortgage is over ten years old, and each monthly $700 mortgage payment reduces the principal owed to the bank by $430 or so)
4. There is also, in addition to the mortgage, a nine thousand dollar home improvement loan, owed to the same bank that granted the original mortgage.
5. There are unpaid property taxes in the amount of $983, which is this year's assessment; prior years were paid in full.
Husband's lawyer argues:
"Judge, this house thing is very simple, and I'm not going to spend a lot of time on it: we've got a lot more to talk about in this case. As you know, it's a very simple arithmetic problem: the value of the house is $140,000 (yes, I know that their appraisal is for $120,000, but that appraisal has problems: the 'comparable homes' that they used weren't even in the same neighborhood, and you heard the testimony of the so-called appraiser, when I cross examined him, and there's no question that if that house sold today, it would be expected to bring in the neighborhood of $140,000. Then there are two loans against the house, the mortgage and the home improvement loan, they both go together, and we have no problem with you ordering that Wife keeps the house, on the condition that she pay those loans, and hold my client harmless from any further liability on those debts. Give her the house, and the debts, and value it at $71,000, that's the net equity, on her side of the ledger, if you will, and she keeps the debts that go with it. Now let's talk about the other issues...."
Wife's attorney argues to the Court:
Judge, this situation is not that simple. The house is only worth $120,000, for one thing, and it's not even worth that, because you have to subtract the real estate commission of 7%. That house is going to be sold, sooner or later, and that commission is going to have to be paid. 7% of $120,000 is $8,400. So the "fair market value of the house is $111,600, and that's ignoring the closing costs, like points, that will very likely have to be paid. Now let's talk about that mortgage: the mortgage balance is to be subtracted from the fair market value, sure, but the mortgage balance WHEN? When Husband walked out, the mortgage balance was $63,300. Every penny of mortgage reduction since that date has been made by my client alone, with no contribution to that house from Husband. If you take the sixty-three thou from the $111,600, you end up at just less than fifty seven thousand dollars as the figure for net equity on the house. Oh, and what about that second mortgage? Husband ought to be ordered to KEEP that debt, and pay it according to it's terms, because he took all that money: it's called a home improvement loan, but it went to pay off his business debts, not to improve the house. Not one dime went into the house. In addition to valuing this house at fifty seven thousand, rather than their seventy one thousand dollar figure, Husband ought to be ordered to pay the home improvment loan separately. In addition, I see from my notes here that there is about a thousand dollars worth of taxes still owing, so it's not really fifty seven thousand, it's fifty six thousand, that this home ought to be valued at."
So, as you can see, the parties are twenty four thousand dollars apart, even after they've evidently agreed that wife keep the home. And it's all real money, isn't it?
The judge may value the home at $120,000, or $140,000, or any figure in between. Further, the judge may or may not subtract that sales commission. Or a part of it. Further, the judge may or may not choose to stick the wife with that "home improvement" loan that didn't improve the house. Or a part of it. Same with those property taxes. Both lawyers here, however, evidently missed the fact that there is a mortgage escrow account at that bank, which might or might not have a couple thousand dollars in it. If nobody mentions it, it'll go to the Wife, along with the house, so maybe her lawyer didn't miss it after all, he just didn't care to mention it, after noticing that the other side didn't want to argue about it...[smile].
Good luck with it.