The closing that probably won't happen
Girl meets married man with three kids. Married man leaves wife and empties 401k to buy house for himself and girlfriend. Ten years later, girl and married man break up and put their house on the market. A year before this happens, girl's name was added to the deed.
So, we bid on this house, it's under contract, everything seems to be going smoothly. Just before closing, title search is done. Seems that the current owner owes his ex-wife in excess of $150,000 in back child support. There is a lien on the house. The man says ex-wife can have his half of the profit from the sale of the house, but that's only $50,000.
The ex-wife says that's not good enough--I want all the money, since you bought the house with our 401k money. The girlfriend says, "No, I'm not giving you a dime" and states she has put $80,000 into the property and has the paper trail to prove it.
I'm wondering this: If you are putting your name on someone else's deed, wouldn't you use a lawyer (NJ) and wouldn't there be a title search? The girlfriend told us that she knew about the lien before she even put the house on the market (but they both checked "no" on the disclosure to the question "Do you know of any liens on the property?"). Wouldn't someone have informed her that adding her name to a property with an existing lien would make her responsible for the debt?
Anyway, we are six weeks past the original closing date and one day past the "Time is of the essence letter" deadline and......nothing. The lawyer is certain that someone will cave, but wouldn't someone have caved by now?
I know we can sue for the fraudulent disclosure and go after all we have invested so far (mortgage fees, inspections, lawyer fees), but it doesn't sound like we would see a penny of it (PS- the girlfriend filed for bankruptcy right before she put the house on the market). Meanwhile, the mortgage company would not hold our interest rate (which has since gone up) without a $630 charge every fourteen days that we don't close. So, we agreed to cancel the mortgage for the time being.
The big problem is that we really love this house--the property is very unique. Any advice besides "It sucks to be you?"