Legal Question in Real Estate Law in Maryland

I got divorced in 2011 and my boyfriend and I bought my marital home together 18 months ago for 478k. We never made any agreements in writing concerning the house as to what would happen if we decided to break up and go our separate ways. It was appraised in April 2011 for 490k. We are now going to go our separate ways and I will stay in the house and refinance it, keeping it. That is all set, we go to clsoing on October 25th. Last week, the house was appriased at 550k. We owe 467k on the house so 550k-467k = 83k which he says he is our equity. (We agreed to a 60/40 split on the mortgage since he is poor he only pays 40% of the mortgage and I pay 60% of it.) So now, he wants me to pay him 33,200.00 (40% of 83k)!! I think that is crazy. The house appraised for 550k but that is no guarantee that we could get that amount. He is saying he wants his equity in the house paid out to him in cash so he can go buy another house. I think equity is what we bought the house for, 478k minus what we owe 467k, so that is 11k. He says it is not and he wants his 33,200k. I am not sure what to do or if I am leagally bound to even give him any equity since he was only on the deed for 18 months. In addition, he never paid for the first settlement costs of 12k which he said he would pay and he is not going to pay the 11k to close again when I get him off the deed so he is saying that he will just pay that debt to me out of his proceeds from the equity (!). If that happens, I will not get any cash at all which I need. To be fair - and I wonder if I even need to do this legally - I am thinking that what we should do is take the two appraisals, the 490k and the 550k and average them to get the equity. The appraisal would be 520k, minus out the money he owes me for the two closings and then factor in his 40% of the cost to hire an agent to sell the house which would be 6% of 520k. I just need some help to determine if I have to do this, and if I have to - what is actually FAIR since he was only there for 18 months. I have been in this house since 2001 and want to do right by him, but I think he wants a lot of money from me and I don't know what to do. Please help. Thanks so much.


Asked on 10/22/12, 6:21 am

1 Answer from Attorneys
Robert Sher Wagshal and Sher

Equity is defined as the difference between fair market value and any loan balances, so in that sense if the house is indeed worth $550k now the equity is $83k. Of course, in view of the way the real estate market has gone of late an appreciation of over 10% in such a short period of time seems suspect. If you think it really wouldn't sell for that you could ask a realtor knowledgeable of the market in your area to give you an evaluation, which they will usually do without charge. If you and your boyfriend can't agree he isn't going to sign over his interest in the property and then your only solution will be an expensive and time consuming court case known as a partition action. I agree with you that he should pay his share of the closing costs on both the purchase and the sale back since he is getting equity out of it. If he agreed to pay the full $12k from last year, he should pay $4400 (40%x11k) for this week's closing and therefore his net proceeds would be $16800 ($33200-$16400) based on the $550k fmv.

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Answered on 10/22/12, 7:55 am


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