Husband is sued, is wife's share of property at risk?

[jerrybee]

Sorry the title should read:

"Husband is sued, is wife's share **OF** property at risk?"

Assuming a standard 50/50 ownership between married couples. If they own a $1m property jointly and the husband is successfully sued for $600k, is the wife's share at risk? Or are the courts only able to get 500k max, and the husband would need to find the remaining amount elsewhere?

This assumes the wife shares no legal responsibility and is an innocent party.

 

[Truly Exotic]

I can't se why it shouldn't, as his name is on the house, and her share is part of the martial asset pool

 

[jerrybee]

I can't se why it shouldn't, as his name is on the house, and her share is part of the martial asset pool

What if she divorces him before he even went to court? Or is it too late...is she liable the minute he committed the act?

 

[Truly Exotic]

What if she divorces him before he even went to court? Or is it too late...is she liable the minute he committed the act?

Hmm, good question, divorces take a minimum of one year
And I would suspect it's all calculated when he gets charged or held responsible for the act

But that being said, once you do the bad act, you could move assets out

 

[thatbum]

Generally only the husband's share of ownership would be at risk.

 

[Terry_w]

Each individual is only responsible for their own debt. So a wife isn't liable for a husband and vice versa. As long as there are not personal guarantees too.

If the husband is sued and someone gets a judgment against him, then he will owe them money. He can pay up or the judgment creditor will begin action to seize property, probably by bankrupting him.

So if a husband and wife own a property as Joint Tenants, then this will be severed and the wife will own the property with the trustee in bankruptcy as tenants in common 50/50. She will have the option of buying the husband's share or the property may be sold on the open market.

If the property is held tenants in common then the trustee in bankruptcy would get the share of the bankrupt in the same percentage. Wife would have the option to buy out or property may be sold.

If there is no equity then the trustee may not take the property but leave it as is - and then they have the ability to take the property at a later date, even when the husband is out of bankruptcy. They may wait for equity to build up.

The risk with joint tenants is while the matter is going through the courts if the wife died the husband would automatically take the whole property just before bankruptyc and then lose it all. A joint tenancy could be severed or changed to tenants in common to avoid this.

Now where a property is held 100% in the wife's name the property is still not 100% safe because a trustee in bankruptcy could argue that the property is owned by the wife as trustee for the husabnd's 50%. This argument will be stronger if the hsuband paid the deposit, the loan, or the bills etc. This is not a formal trust but a court could say there is a trust type relationship - a constructive trust or a resulting trsut.

 

[devank]

The risk with joint tenants is while the matter is going through the courts if the wife died the husband would automatically take the whole property just before bankruptyc and then lose it all. A joint tenancy could be severed or changed to tenants in common to avoid this.

Are they allowed to sell the property while the matter is going through the courts? So at least the wife's 50% share can be moved somewhere else?

 

[Terry_w]

Are they allowed to sell the property while the matter is going through the courts? So at least the wife's 50% share can be moved somewhere else?

Who do you mean by "they"?

The wife could sell her property at any time. So could the husband. But care must be taken as transfers to defeat creditors could be void under the bankruptcy act and they conveyancing acts.

 

[Truly Exotic]

Hang on

So if husband and wife on the title , house is worth 500k

Husband gets sued for 500
Bank only takes 250 ofhusbamds share????

So cn the bank not sell it?

Doesn't sound right

 

[Terry_w]

Hang on

So if husband and wife on the title , house is worth 500k

Husband gets sued for 500
Bank only takes 250 ofhusbamds share????

So cn the bank not sell it?

Doesn't sound right

Why is the bank taking the house?

If the loan isn't being prepaid or other breach of mortgage the bank can take the house and sell it, paid off the loan and chase the husband and wife for any shortfall.

If the bank is suing the husband for something else, maybe a margin call on a loan or similar, then as long as the wife hasn't signed anything and the property hasn't been used as security then the bank can only take the husband's share of the property.

 

[Truly Exotic]

Why is the bank taking the house?

If the loan isn't being prepaid or other breach of mortgage the bank can take the house and sell it, paid off the loan and chase the husband and wife for any shortfall.

If the bank is suing the husband for something else, maybe a margin call on a loan or similar, then as long as the wife hasn't signed anything and the property hasn't been used as security then the bank can only take the husband's share of the property.

So how does the husband forfeit his share of the housr if it doesn't get sold?

So if I sued someone who owned 99% of a house, and I won the case, how would I get my windfall?

 

[Terry_w]

So how does the husband forfeit his share of the housr if it doesn't get sold?

So if I sued someone who owned 99% of a house, and I won the case, how would I get my windfall?

You would servce a notice of bankruptcy on them and then have a trustee in bankruptcy appointed. They would take the property of the bankrupt, and try to pay creditors such as yourself. The other 1% of the house would be safe.