Legal Question in Family Law in Massachusetts
Partial buyout/division of equity
My divorce agreement decree states:
''When the property is sold or one party buys the other out, the parties acknowledge that they shall be entitled to 50% of the net proceeds, less amount previously received from any refinance.''
How does this work in the end? We refinanced at have approximately $50,000 in cash out. If we each take $25,000 now, is it a wash? Am I simply giving him a loan and paying interest? OR will he receive $25,000 less than me if we sell or I buy him out, since I am making the payments on my $25,000 AND his $25,000?
1 Answer from Attorneys
Re: Partial buyout/division of equity
The intent is clearly that you each get 50% of the equity after expenses of sale or refinancing. If you are both joining in refinancing, rather than one of you refinancing to buy the other out, and are splitting the proceeds equally, it will not affect the amount due (50% each) on the sale of the house.
If the division is not equal, then when the house is later sold, or one of you buys out the other, you will have to adjust the amounts distributed to each of you by the amount received at the time of refinancing.
The order does not take into account the fact that the person taking a larger share of the refinancing proceeds should be paying a larger share of the mortgage payments after refinancing. You will either have to agree or take it back to court.
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