Will I be liable the home that my wife still owns with her ex in the event it goes into foreclosure?
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Will I be liable the home that my wife still owns with her ex in the event it goes into foreclosure?
My wife has owned a home for 25 years. She and her ex-husband took out a mortgage loan on the home 16 years ago. Last year, her ex signed away all rights on the home in amended JOD. but he is still primary on the mortgage. The house is worth much much less than the amount owed on it. The home is now vacant and needs way too much to become salable. I am looking at about 40K to make it
livable. My wife is sole owner on the deed and by JOD. My wife has cancer and the outcome looks very questionable. The home is over 2 hours away. The house is burning cash and serves no useful purpose to us. As of now the payments are current. I am thinking I will let the bank take it. I am sure her ex will declare bankruptcy soon. My wife and I own another home that is 100% paid for that we are living in. What can I do to protect myself or need I do anything?
Asked on February 7, 2017 under Real Estate Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
You are not personally liable for your wife's debt on a home she owned pre-marriage, so you cannot be personally sued for any unpaid balance. But if there is an unpaid balance, the lender can sue your wife (and her ex) for a deficiency judgment, and they could potentially reach her share of any joint or marital assets (put a lien on a jointly owned home; levy on her portion of a joint bank account).
There's not much you can do to protect from the above happening, other than put as much as you can into assets protected from creditors--primarily 401s and IRAs--and don't take money out from protected assets in the meantime; leave it where it is safe.
Note that the lender could choose to sue instead of foreclosing (taking the house)--foreclosure is an option for them, but is not mandatory. And even if they do foreclose, if the house, after the expenses of foreclosure and the foreclosure sale, brings in less than the remaining balance on the loan, your state allows them to sue for that unpaid "deficiency."
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