Sub2 and Divorce

How does a divorce affect a sub2 deal? Have a possible deal but folks are in middle of divorce. If get deed now will it be found out about even though in trust? In a division of assets, who gets stuck with loan even though there is no asset to back it? If anyone has done a deal with a pending divorce would like to hear how it was handled. Live in Texas so community property state.

Thanks for the advice.
Mike Crow

Howdy Mike:

From what I remember about law and divorce is that divorce does not change the debt owed to the mortgage company or who is still liable. Both are still liable even if one spouce gets the house and any equity. This is if they both agreed to pay for the loan. I have signed on loans where the wife was not liable but she had to be on the deed because of community property laws.

The spouse getting stuck with liability but no house hopefully will get something of equal value. This does not always work . I have seen several times where one spouse has filed BK because the other spouse could not keep up the house payments.

Divorce makes strange bedfellows but also creats opportunities for us vultures. ( Just kidding). If we can buy their property eithersub2 or cash if they need to sell it may lessen the pain for both and give us a good deal at the same time.

My experience is limited with divorce and hope some other members can add some of their insight here too.

Thanks for the response. I think my biggest fear? about this deal is the attorneys getting mixed up in the debt with the mortgage company. How come you sold the house but still have the debt? Do not want to deal with a bunch of attorneys on my first deal. Maybe just better to let them settle divorce and then take house. Neither can afford payment on their own but by the time I get another chance they will probably be behind and not enough equity to make a huge back payment.

Mike Crow

You may stay close and find out who gets the house. It could be ordered to be sold too thru a Realtor also and the proceeds to be divided. You are correct it could be messy. Go ahead and let them both know how you feel and maye you can all work out something.

Good luck

This happened to me - I divorced, and my husband got the house, and no one bothered to tell us about a quit claim deed, which is required for the mortgagee(s) to change ownership. So when he stopped making payments, I discovered I still owed half the house!

They can quit claim it to one another, or you, and they can also sell the property - if they’re both on title, just get both of their signatures (they can come to closing separately). Otherwise, get one to quit claim it (it cost about $250 8 years ago) and then buy it from the remaining party.

Best of luck!

Thanks Halle,
The deal fell apart. Wife originally told me owed 97K on note and house was in great shape. Took all of the docs to get deed and owed 99K and house needed alot of work. I thought about quit claim from one to the other but both names were on deed. Talked to a friend of mine and he said it wouldn’t be a problem doing the sub2 during divorce. Just have sellers tell attorneys that house had been sold and move on. Thanks for the help.