SA Property Settlement - Did Friend Get Stiffed?

[Huddo]

10 years ago, a friend of mine went through a divorce. She is vision impaired so it was important to her to keep the house where she knew her surroundings well. She had lived for there 10 years. Their original mortgage was for $110k. I think they’d paid off about half of it and then he redrew $30k to buy a car that returned $3k in the property settlement.

On top of that, to keep the house, the bank/lawyers (who knows who really?) made her take out a new loan for the current market value of the house. So she had to borrow $330k to pay out the original mortgage and then pay him out with what was left.

My question is: did she get stiffed? Couldn’t she have just paid him out by increasing her original mortgage after having him removed from it?

Seems like everybody made money except her, who winds up 10 years on still owing $295k for a house she should’ve had about $90k left to pay.

 

[Rob Legat - SBPL]

At a quick look it doesn’t sound like there’s anything untoward here. Banks don’t just take someone off a mortgage. The title to the property would have been transferred and the usual process is to release the mortgage and then register a new one. It is possible in some states to transfer a property subject to a mortgage, but very unusual (and usually fries the bank’s mind).

Then, I would say that the value of the house had increased - which would form part of the property pool - and your friend had to pay her ex out his part of the increased equity. From what it sounds like, the house was their major asset. So, in order to access the equity to pay him she would have had to take a larger mortgage.