By 
Dear Quentin,
My long-time girlfriend and I moved to Florida three years ago. After renting a home for a year in an area we liked, we bought a home together. I was not working at the time, she was, so we agreed that it would make sense to not put me on the loan application, even though my credit score was higher than hers (however, we both have what would be considered “good” scores — north of 725 and 800). I believe the mortgage-loan originator thought that was also the right way to go. We made an offer on a home, signed by both of us, and it was accepted.
She had proceeds from a sale of a prior home and she paid for many of the inspection costs herself. We put 20% down for the purchase and took a mortgage for the rest. She did pay a larger portion of that 20% than I did. Both of our names were on the closing documents — those not specifically related to the mortgage — and both of our names were on the deed.
I also bought the adjacent vacant lot with my own cash and put both of our names on that deed. That was a separate transaction with a different party than the home purchase.
We proceeded to both make half of the mortgage payment each month for the home we share. We also spent money on home improvements and upkeep: New countertops, appliances, flooring, paint, et cetera. I paid for some of the expenses, she paid for more. I did all of the home improvement work myself.
“‘The closing company said they typically don’t split wire transfers and I was OK with that.’”
Seventeen months later, we decided to sell our home. Looking back now, it looks like we may have sold at the top of the current Florida real-estate boom. The home sold for nearly double what we paid. After paying off the mortgage, net proceeds were just under $200,000.
At the time of the close, all proceeds were wired to her bank account, which I agreed to because it was just easier. The closing company said they typically don’t split wire transfers and I was OK with that. I thought we were pretty solid and I had no concerns.
It’s been five months since the closing, and things are rocky between us. I’m getting pushback when I’ve asked for my share of the proceeds. My position is that we both should have all of our expenses reimbursed, and the remaining proceeds should be split 50/50.
I believe her expenses/costs for improvements, new appliances, inspections, et cetera, may amount to around $30,000 whereas mine are more in the neighborhood of $20,000.
In this example, that would leave approximately $150,000 to be split evenly, so $75,000 apiece. I’ve had $25,000 transferred to me, leaving her with approximately $175,000. I feel l have another $70,000 due to me — my share of profits ($75,000 + my expenses of $20,000 = $95,000).
Am I wrong in my thinking? What should we be including and excluding in our list of expenses that we should get reimbursed for? For example, in her list of expenses, she’s including the monthly cable/internet bill, which seems OK to me but that’s also the bill I paid in our rental house for 13 months, yet I never got any of that money back.
Any guidance you can provide is greatly appreciated.
Fair in Florida
Dear Fair,
This standoff could have been predicted in the tea leaves.
Nothing happens by accident. Of course, that was easier only for the person who was receiving the funds. It was never going to be easy for the one whose bank account remains empty. You must proceed on that basis. This was not a chance turn of events. It was — regardless of what your girlfriend (or ex-girlfriend) maintains — done with the knowledge that she would hold all the cards. I presume you cleared $200,000 after capital-gains taxes.
Overall, I agree with your logic about splitting the costs, but that won’t get you very far. The cable-bill payments are the least of your worries. The longer you quibble over the details, the longer that money stays in your former girlfriend’s bank account, and the more chance there is of the money being spent, or transferred to other bank accounts. She can’t give you what she claims she no longer has, and the money will be more difficult to trace as time goes on.
You were both on the deed, and you both had a 50% share in the property, so the law is on your side. Consult a lawyer to figure out an action plan, but before you become embroiled into a protracted and lengthy legal battle with your girlfriend, suggest hiring a mediator to help you sort through your sticking points. Be prepared to compromise. It may be that she is prevaricating and stonewalling you until she decides her next move. Clearly, $25,000 for you is not enough.
“‘You both paid bills and invested in upgrades, but you invested in a property that was jointly owned 50/50.’”
Be prepared to take legal action if/when it becomes clear that she does not wish to split the proceeds fairly. But you both spent money on the property, and if your ex wants to push you into litigation, it would be wise to inform her that she may well end up owing you the full 50% of the proceeds — that is, $100,000. You both paid bills and invested in upgrades, but you invested in a property that was jointly owned 50/50. If she is smart, she should settle with you now.
Another possible source of leverage: The other property that you purchased together. If you were to file a partition action to sell that property now, you would lose money and she would lose a potentially hefty profit, so it makes sense for you and she to remain on good terms — regardless of the status of your relationship — to ensure a bigger payday in the future. It would not be wise for her to pass on a profitable venture down the road for short-term gains today.
She has physical control of the $175,000, but she does not have the legal standing to keep it. Split the $200,000 minus the difference in your down payments and renovations. No doubt, however, it will be a harder negotiation given that she has possession of the funds. It’s tempting to imagine what she could do with $175,000, and she may be making all sorts of rationalizations as to why she should keep the lion’s share. A mediator should give her a deadline to transfer the agreed funds.
If she does not meet that deadline, lawyer up.
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