Divorce decree does not exempt ex from mortgage obligation

Q. What are my granddaughter's options? She and her husband divorced, and the decree stated the husband could have the house provided he refinanced or sold within 90 days. Both parties are on deed and mortgage. Ninety days have passed, but he never attempted to sell or refinance.

She moved out 10 months ago and recently learned that the ex-husband has caused considerable damage (holes in walls, carpets ruined by pit bull, damage to exterior siding and lawn by dogs). Before the divorce, the house was probably worth slightly more than the mortgage amount.

A. And that's certainly when it should have been sold, before the divorce was finalized. About all I can offer your granddaughter is sympathy.

I'm printing your letter mainly to alert anyone contemplating a divorce or a breakup that mortgage companies don't have to pay any attention to a divorce decree. Until the loan is paid off, anyone who signed the documents is personally responsible for the whole debt. That would be true even if your granddaughter were no longer a co-owner.

She should consult her divorce attorney or another lawyer. I hope they have something to suggest. My guess is that she's just out of luck. I can't see that it's worth trying to take sole ownership, and there may not be much point in trying to sue her ex for damages. She'll be lucky if he continues to make payments, so her credit score won't be hurt.

Q. What is more valuable when selling a house: having two living spaces or one living space and a home office/fourth bedroom? Also in the master bathroom, is it better to have a bathtub or a second sink?

A. At resale, a small in-law apartment would probably be worth more than an extra bedroom. But before you do anything, make sure your local zoning allows it.

A tub or extra sink is pretty much a matter of personal choice, assuming the house already has a bathtub somewhere else. It'd be hard to sell a house that had no tub at all.

Reader tips

Ÿ I am writing in response to the letter with the headline, “cash buyer needed for home with bad roof.” This is absolutely a prime candidate for a 203(k) loan program, which lends money not only to buy the property but also to repair it.

Guidelines for qualification are the same for the better-known Federal Housing Administration program: down payment is 3.5 percent and appraisals are based on future value after repairs are made. Get this: there is also a 10 percent variance factor allowed if the appraisal comes in a bit short.

The FHA 203(k) program is powerful to get distressed properties sold and allows homebuyers to take advantage of securing a good deal and transforming it into a great home. Also, current homeowners can use this program to finance home repairs and renovations.

Ÿ As a licensed mortgage loan originator, I wanted to point out the FHA's 203(k) program is specifically designed for this type of situation. If a home needs repair(s) (in this case, a roof), and the buyer can qualify under FHA's underwriting guidelines, this is a very easy situation to address.

The buyer just needs to find a real estate agent who is familiar with FHA and has a relationship with a lender/broker that can guide/educate the buyer(s) and navigate FHA's 203(k) rehabilitation loan.

Ÿ I disagree with your statement “the definition of market value boils down to what someone will pay.” Market value's true definition includes: equally motivated buyer and seller, the highest price a reasonable buyer will pay, and the lowest a reasonable seller will take.

A. Unfortunately, the column is limited in space and there's almost always more that could be said. “What someone will pay” takes only four words — you gave me 21 words. And for a really accurate definition, we'd also need “with both buyer and seller fully informed about the uses to which the property can be put” and “neither party under duress” with examples of what “under duress” might mean. Then something about the requirement being an arm's length transaction. We'd need to explain “arm's length”: a transaction between relative strangers, each trying to do the best for himself or herself.

It'd be helpful to include examples of sales that weren't an arm's length, perhaps between employer and employee or father and son and so on and on. And there goes the whole 800-word column.

I'm still willing to defend “what someone will pay” as a handy definition.

Ÿ Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

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