Business

Financial risks remain after homeowners split

DEAR MR. MYERS: I am getting a divorce. I am planning to move out and sign a quitclaim deed that gives my half-interest in the home to her, as she wants to stay in the house and begin making the mortgage payments by herself. We both signed the original mortgage contract, but will the fact that I’m signing a quitclaim prevent the bank from forcing me to make the future payments if my ex-wife doesn’t make them herself?

ANSWER: The lender still can legally try to force you to make the future payments if your soon-to-be ex-wife cannot or does not make them herself. The loan contract you signed is a legal obligation that both of you accepted when the home was first purchased. The bank’s right to enforce the contract will remain intact even though you’re now getting a divorce and signing a quitclaim that relinquishes your personal half-interest in the home to her.

In short, you would be legally liable for the payments if your ex defaults on the loan, even though you no longer have a financial stake in the house. And the bank almost certainly would begin foreclosure proceedings if the debt went unpaid for a few months, which would ruin both your own and your ex-spouse’s credit rating and future ability to get another mortgage.

Obviously, the simplest solution here would be to insist that the home be sold. The bank would be paid from the loan proceeds, and the remaining profit could be split any way the two of you wish.

Because your wife wants to keep the home, perhaps the best alternative would be to have her refinance the current mortgage in her name only, and thus sever your financial ties to the property and its loan. If she doesn’t earn enough money to qualify for a loan by herself, perhaps her parents or other relatives might be willing to co-sign the mortgage for her.

REAL ESTATE TRIVIA: The National Association of Realtors reports that San Jose, the heart of California’s fabled Silicon Valley, is now the priciest housing market in the nation. Its median price is $970,000, meaning that half of all homes sell for less than that, but the other half sell for more.

DEAR MR. MYERS: What is a “building line”?

ANSWER: It’s a line, usually set by a city or county ordinance, that limits how close a newly built home or remodeling project can get to the street. Building lines help to provide public safety and also keep the “feel” of the neighborhood intact.

DEAR MR. MYERS: Despite all the media fuss about singer Prince’s death and the battle over his estate, I haven’t seen or heard any reports about what the Minneapolis compound where he lived is like. Do you have any details?

ANSWER: Some, but not many. The pop-music icon, who passed away April 27 at the age of 57, liked to keep his private life, well, private. He didn’t exactly hold regular summer barbeques at his home in an upscale suburb a few miles southwest of Minneapolis, much less invite reporters to tour the estate. But he recorded nearly 30 albums there in a high-tech studio that rivaled the best in Los Angeles or New York.

The 65,000-square-foot complex consists of two sterile-white buildings, prompting one reporter to note that its exterior “looks more like a research lab or corporate headquarters than a music studio, occasional concert venue and sometimes residence.”

The main building’s first floor houses the production and performance facilities, and the second level contains executive offices, according to Bret Thoeny, the architect who designed the compound for Prince about 30 years ago. The bottom floor has three palatial bedrooms but few windows, so the performer could work without knowing whether it was night or day.

“A portion of it was like a stayover where, if he was in the studio late — which he always was, he could just ‘crash’ for a few hours and get back in the studio,” Thoeny said.

Local real estate agents aren’t sure how much the nine-acre estate might fetch when it is finally put up for sale. The county assessor values it at $7 million: Most agents say that it will sell for much more, but a few say that the selling price could be cut because some would-be buyers won’t want to pay millions of dollars for a house in which the former owner was found dead in the glitzy elevator.

It’s sad to note that, at this printing, more than 10 people have gone to court to claim that they are entitled to at least a portion of Prince’s $300-million-plus financial estate. They’ll likely spend lots of money and several months or even years arguing in front of a judge, all of which could have been avoided if the entertainer had taken a little time to create a living trust that would automatically leave his money to the people (and his numerous charities) that he loved best.

David W. Myers’ column is distributed by Cowles Syndicate Inc.

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