Tuesday, November 12, 2013
Net Value of "Underwater" Real Estate Can't be Zero in Contested Matter
The MN Court of Appeals in Middendorf recently ruled that the trial court erred in finding the net value of real estate to be zero when the facts are that the mortgage loan balance exceeds the fair market value. Argument that the value will rise in the future must be supported by evidence, not just speculation. So the party seeking to retain the home, for example, could argue that he or she should be awarded offsetting property, such as stocks or retirement funds, to equalize the propetty division. But practically speaking, they could walk away from the house and allow foreclosure and never have to pay the loan. The trial court should probably fashion an award that doesn't permit such a windfall.