Bob Howard Interview 1 – 11-03-15

Carol : Oh my God, I’m getting a lot of feedback back here today. It must be election day, that’s why. If you guys want to get on the show, get yourself heard on Networking Arizona and call us at the station here. You’ve got to help me out, I’ve got a lot of feedback here today. Call us at 602.227.5369 and get yourself heard on Networking Arizona. I don’t know what’s going on with today, a little bit of the feedback here. We’ll get that all set up by the end of the show, okay? My first guest, luckily, has been on many, many times with me. I have with me Bob Howard. Thank you very much, a little bit better. There we go. We’re starting to get it now. He is with the law offices of Stewart and…
Bob : It’s the Stewart Law Group.
Carol : The Stewart Law Group.
Bob : That’s right.
Carol : We’re doing it different. They’ve changed so many times. Bob, welcome back to the show.
Bob : We keep getting better, that’s all.
Carol : Tell everybody what you do.
Bob : Our firm is primarily involved in family law, so we will do divorces, and legal separations, and post decree modifications. We even do some prenups and postnuptial agreements.
Carol : Everything.
Bob : Everything in the family law area.
Carol : You have also four offices throughout the valley. You do free consultations.
Bob : Indeed.
Carol : You also, you’re, I don’t know if what he is there, the owner, Scott David Stewart, wrote the handbook, The Arizona Divorce Handbook. It’s your step by step guide to navigating an Arizona divorce. We’re going to give it away. I want you to talk about it for just a second here while we fix the sound.
Bob : The book is one of those go to types of manuals. It’ll probably answer 90% of your questions. Then we can give you more refined answers after you’ve got a general idea of what’s going to happen. It’s a really good starting place if you’re going through a divorce and you just have no idea what might happen in Arizona.
Carol : It’s also something great if you’ve been through one and even if you’re getting married. I told people they should give it to somebody.
Bob : I totally agree. There’s so many people that do their own divorces and then suddenly realize, “Gee, we never divided the pension plan” or “We didn’t divide up this particular debt,” and now they’ve got post decree issues. If you read this afterward, you might find out a few things you need to go back to court and get done.
Carol : Also, you’re all about education.
Bob : That’s right.
Carol : That’s what you want to do is educate the public. We’re going to open up the lines to everybody here that’s listening so that you can call in, and everyone’s going to get that book. Also, we want you to, if you want to, you can ask questions as well. You’ll get a little bit of free advice here on Networking Arizona. Whether you do or not, you’re going to get the book. I believe that everybody should take a look at this and have it, especially if you’ve been through a divorce or are thinking of going through one. It’s really easy reading, and I like it. I don’t want to say easy reading. It’s easy to understand.
Bob : Right. It’s written for the basic understanding of everybody.
Carol : Right. Now today you said you wanted to talk about who gets the house.
Bob : It’s the biggest asset in most divorces, and that’s the first question, who is going to get to stay in this house, or keep it, or whatever, so I thought we’d talk about that today.
Carol : I think it’s a great, great topic. Since the house is usually the biggest asset in a divorce, who does get it?
Bob : Like everything else, it depends, but we’re going to ask three questions. We’re going to ask, how is title held? We’re going to ask, what was the source of payment? We’re going to ask, when was the house acquired? Why are we asking those things? We need to first decide whether the house was separate property or joint or community property. If it’s separate property, whoever owns it is going to get to keep the house. They may have to pay out for some of the equity that developed during the marriage, but they will get to keep the house. If it’s community property, then we’re down a whole different sort of thing. Let’s talk about that, how is title held?
In Arizona you can hold title as tenants in common, joint tenants with right of survivorship, community property with right of survivorship, or you can hold it in your sole name. Sometimes it will say so-and-so as his sole and separate property. Sometimes it will say so-and-so as community property. That can be very telling. Bottom line is if there’s only one name on the title, then we need to start moving to the other questions, when was the house acquired? If it was acquired prior to the marriage, probably a pretty good indication that it’s going to be sole and separate property. If it’s acquired after the marriage, using community funds, now it’s probably going to be joint property, even though the title may be held by one person. You have to ask a few different questions. We have to analyze the situation.
Carol : What about if somebody who gets married to someone, who a lot of people do today, who might have had a house, and then they take and they sign it over to them?
Bob : That is a very common situation, and what Arizona law had been up until the late 1990s was that the court presumes a gift. Even though that house was separate property when the marriage started, if the owner of the house decides to title it in joint tenants with right of survivorship or community property right of survivorship, usually to avoid probate, what they don’t realize, they just made a gift of half the value of the house to their spouse.
Carol : Thank you.
Bob : Sometimes that’s intended, sometimes it’s not. Up until, like I say, the late 1990s, it was almost a given that every case would be decided to be a gift because they created this presumption that was nearly irrebuttable. Then came the Toth Case. See, Mr. Toth, he got married later in life and a few days after he got married to Mrs. Toth deeded the house over to her, even though he had paid for it. The marriage didn’t work out. It didn’t work out, like three weeks it didn’t work out. This is all according to the footnotes. Apparently, Mrs. Toth wasn’t quite as frisky as Mr. Toth, and they separated and divorced. Of course she, relying on longstanding law of Arizona said, “Well, he made a gift of half the house to me.” The trial court said, “You’re right.” The Court of Appeals said, “You’re absolutely right.”
It went to the Supreme Court. Now I’m thinking the guys on the Supreme Court were about Mr. Toth’s age, and they could put their selves in his position. They fashioned a decision that said, “Oh, no, we’re a court of equity, and if it’s only a three week marriage, we don’t really think it’s equitable that he may be held to have gifted her half the value of the house,” so they let Mr. Toth keep the house. Is that an aberration or is that really hard case law? That’s what the attorneys have been arguing about for the last 15 years. If you do have that situation of a very short duration in marriage, maybe the Toth case will take it out of it, but for the most part, you can presume that if you put your spouse’s name on the title of the house, you just made a gift to him or her.
Carol : Now our lines are open here. You can call in. You can ask questions if you want. Everyone’s going to get The Arizona Divorce Handbook. It’s your step by step guide to navigating an Arizona divorce. Our number here is 602.277.5369. Toll free it’s 1.866.536.1100. They have four offices throughout the valley. Their phone number is 602.548.4600. I also want to get out right now too that it doesn’t have to be about the house. It could be anything pertaining to anything …
Bob : Absolutely.
Carol : … That you might have a question about your pending divorce or whatever, if you’ve been through one, if you’re thinking about going back into one, or whatever. Again, our number here is 602.277.5369. Their website is I want to ask you something before I get something like this, because my mind’s spinning, because a lot of people who also in the last recent years there’s some people who went upside down, things that happened. I don’t know if they’re still in that situation though.
Bob : We don’t see as much anymore, but for a while there, you’re absolutely right, we were seeing a lot of negative equity cases where neither party had any … There was no equity in the house. There was nothing to divide up. They were trying to get it sold and they couldn’t even sell it at a short sale.
Carol : Right. Who gets the burn on that?
Bob : They both do essentially. I asked a judge at a seminar, “Okay, Judge, what are you going to do if that happens?” He really didn’t have an answer for me. The case law, there wasn’t much of an answer because until 2008, nobody had ever seen negative equity in houses. We’d seen a slow real estate market, but the values didn’t go down.
Carol : What about the houses that went into foreclosure and things like that, that they had those things that they had to pay? I don’t remember what they were. Certainly, everybody got burned on that too.
Bob : Not so much, because there’s some laws in Arizona that indicate that if the loan against the house is purchase money, and if it is a house used for residential purposes, less than 2-1/2 acres, that the bank is limited to taking the house back, selling it and getting whatever they could. They weren’t entitled to get the difference from the couple. Our statutes in Arizona protected the borrowers from being sued if the money originally borrowed was used to purchase the home.
Carol : Our lines are open here, and I know that a lot of people have a lot of different questions about especially when it comes to who’s keeping the house. We’re going to get to some of the difference of the tax records and things like that, that are going forward. Our number here is 602.277.5369. Toll free it’s 866.536.1100. We are talking to Bob Howard, and we have our lines open here for everyone to call in. You’re going to get the book, The Arizona Divorce Handbook, your Step by Step Guide to Navigating an Arizona Divorce. We do want you to get educated. We want everybody to get a chance to have this and get that in their hands. You have four offices throughout the valley. You do free consultations. Their phone number, write it down because I know a lot of people are thinking, “Well, I don’t know if I want to get a … If I bring it up now, the holidays are coming.” No, write the number down so you have it, so you can put it down and make an appointment with them. It’s 602.548.4600. Go ahead.
Bob : You’d be surprised. December is the biggest month for us to be getting consults because right after the first of the year there’s a whole of divorces filed.
Carol : Right. What were we saying that I said I …
Bob : We were talking about the anti-deficiency statute in Arizona. The one thing I was pointing out was that it only applies to the purchase money mortgage. If you’ve got that HELOC, home equity line of credit, to build a swimming pool or something like that, that’s not covered by the anti-deficiency statutes, so those debts people got sued on and would have to eventually pay the lender.
Carol : Right. Now here’s the thing that I did say back to you. Everybody’s got a different story, and that is why you have to get in touch with them, get a consultation with them, let them talk to you, find out what it is. Again, their number is 602.548.4600. What happens if the house is jointly held?
Bob : There’s two possibilities. Either the parties come to an agreement and then they have several different options, or they take it to court. I can pretty well tell you what’s going to happen if it goes to court. The judge is going to say, “Sell the property, split the proceeds.” There may have been a time back in the 40s and 50s when they’d let one party stay in the house until the child graduated from high school so the child wouldn’t be disrupted. Those days are long gone. I don’t know of any judges that are leaving or favoring one party over the other and letting that party stay in the house until some unspecified event, retirement, high school graduation, or whatever. The courts are much more in favor of, “Let’s get the property sold, split the proceeds, everybody can move on with their lives.”
Carol : Move on. Mm-hmm (affirmative).
Bob : If the parties agree, then, “Katie, bar the door.” You can do anything you want. Here’s the biggest or the most common thing that’s done and the biggest mistake that’s often made. One party will buy the other party out of their equity in the house. The party who’s getting bought quit claims it to the remaining party and moves on. What’s wrong with that? They’re still obligated on the mortgage. If the party who stays in the house doesn’t refinance, the party who moved out has this debt on their credit report and their mortgage, and they’re not going to be able to get a car loan … I’m sorry, a …
Carol : Nothing.
Bob : … Real estate loan.
Carol : Forget anything.
Bob : Yeah, it’s going to be tough to get loans because their credit’s already tied up in that old house. That’s the other shoe that often doesn’t drop. If you’re going to let them buy out your equity, you also have to put a provision in there that they refinance, because if they don’t refinance, you’re still obligated on that mortgage until the house is eventually sold.
Carol : Now are you speaking, when you talk it sounds to me like you’re saying that somebody who is getting married, who is thinking about getting a divorce, should actually talk to you before they even do it because it sounds like they should have these things in place?
Bob : Exactly. I mean it’s good to know what the consequences …
Carol : How many people do that? Nobody.
Bob : No, actually …
Carol : They should though.
Bob : They should. You’d be surprised. I do a lot of pre-divorce counseling, people who are coming in to see me three months, six months, two years, believe it or not. I’ve had people come to see me two years before they file the divorce …
Carol : They’ve been fighting a long time.
Bob : Sometimes if the children are 16 or 17, they just wait till the kids turn 18, graduate from high school. It eliminates all the custody issues and the child support issues, so sometimes that’s the reason.
Carol : Makes sense. Again, their phone number is 602.548.4600. Our number here is 602.277.5369. What are the pitfalls of buying out somebody?
Bob : One of them is just getting a value on the house. Some people think that their tax records show an accurate value of their homes. They don’t, not even close. Some people use Zillow. That might be right. It might be 10% off or 10% low. It might be anything. The only real approved way of valuing a house costs money. That means you hire an appraiser. It usually costs about $400 or $500, and get an official appraisal on the house. That’s probably the best way to do it. You can go to a realtor, and they will run some comps for you, and it’ll probably be in the ballpark, but not as accurate. That’s the first pitfall, just making sure that your buyout amount is the right amount.
Carol : I’ll tell you what. We have our lines open here. I’m not sure if we’re hanging on with somebody. We’re going to try and get them on the line for you. Our number here, again, is 602.277.5369. Toll free its 866.536.1100. If you have a question, you can ask it. We do have some time to get you in. If not, we’ll get you connected with him. That’s what we’re all about here at Networking Arizona, 602.277.5369. We talked about that, but I’m going into another. Quit claim, we did that.
Bob : Sort of. What most people do is just sign a quit claim deed. That means I’m transferring whatever interest I have to the other party. The difference, there’s three types of deeds. There’s a general warranty deed, which is the kind of deed you get when you buy the house. There’s a special warranty deed. That’s we usually should use when there’s a divorce. What does a special warranty deed say? “I’m warranting that I have not done anything to screw up the title. I didn’t borrow any money. There’s no judgments held against me.”
When I sign a quit claim deed I’m just saying, “Hey, you can have whatever interest I have in the property,” but if I have a judgment against me and that judgment’s been recorded, they just got the property with a judgment lien against it for God knows how much. That takes you to the issue of maybe you should get title insurance. Even though it’s just one party buying out the other party’s equity, you don’t know sometimes about your spouse. Sometimes it turns out they had judgments against them or they created some sort of lien or a title problem on the property.
Carol : They always have something they don’t know about them.
Bob : Right. If they all did was sign a quit claim deed, you have no recourse at all. At least if they signed a special warranty deed, you can sue them because they breached their warranty, or if you got a title insurance policy, even better, the title insurance company will check the title and make sure there are no liens or encumbrances. This is for the spouse that’s buying the other spouse out. You want to be sure you have good title if you do that.
Carol : Now if you’re buying the other spouse out, all of these things can be changed obviously through an attorney like you?
Bob : Sure. We write up these provisions all the time and …
Carol : You have it done, make sure somebody’s protected.
Bob : … that’s part of the property settlement agreement. Exactly.
Carol : When should somebody move out?
Bob : This is a common question really, because, “Gee, do I have to live in the same house as the other party while the divorce is pending? It’s very uncomfortable” and, yes, I agree it’s very uncomfortable, but in the absence of domestic violence, if no one has threatened one another, why would the judge award the house to one party over the other? It’s a tough decision for the judge to make. I mean it’s really easy if one party’s beating the other party up. Okay, we’re going to kick that spouse out.
Carol : They both go to jail.
Bob : My other thought is that when there’s children involved, they’re not going to kick the children out of the house, so they’re probably going to leave the spouse in the house who is the primary caretaker for the children. That party seems to have a little bit of extra advantage. Generally speaking, I wouldn’t move out of the house until the court either orders you out of the house or you have a written, signed agreement as to what’s going to happen when you move out. I do get a lot of questions, people want to know, “Well, if I move out of the house, will the judge decide that I abandoned the children?” No, that’s not really an issue. The courts don’t look at that as an abandonment just because you decided to move out of the house so you could have a calmer life or something like that.
Carol : It used to be when everybody had money that if somebody left and they said, “I’m out of here,” they went out and they got … Or they went with whoever they were going to be with, or they had the money, but now there are a lot of people out there that stay and even …
Bob : Oh, that’s very common. I have cases pending right now where the parties are continuing to live together. I had a case earlier this month where they agreed to get the property sold, and they got it sold about two weeks ago. People can cooperate if they have to, and in these situations very often they do have to because it’s not like the old days where there was so much money going around that they could support two households.
Carol : Right. Now what happens with problems if they encountered something when they agree to sell the house?
Bob : The first issue sometimes is if one party is in and the other party is out, when are there going to be showings? Will they allow a lock box to be put on the property? I have a case resolved a couple of months ago, but then the wife, who was staying in the house, didn’t want to have a lock box on the house. That’s going to slow down the sale, as any realtor will tell you.
Carol : Because she wanted it that way on purpose.
Bob : It was a subject of multiple emails between the attorneys, and that can be a problem.
Carol : Cha-ching.
Bob : Cha-ching, yeah. Keeping the house clean and in showable condition. Sometimes one party really doesn’t want the house to sell too quickly. They’d rather stay there because at least they’re getting better rent terms than if they go out on their own, so you have to have provisions about that. What happens if the plumbing goes out? Is that something the party in the house should pay for or is that something that both parties should pay for because it’s a major structural type of thing? It’s not like putting a scratch or dent in the wall or something.
Carol : Real quickly, I want to get to this one because I don’t know what it is. What is a real estate commissioner special master? What is that?
Bob : When the parties can’t get together about all this stuff, we appoint somebody who’s a real estate commissioner to take the decision away from them. He sets the price, he determines lock boxes, he determines all that stuff. If you can’t agree, the court will set up an arrangement where you’ll get agreements whether you like it or not.
Carol : Now our lines are open here, and I’m going to let everyone call on throughout the rest of the show. You’re going to get The Arizona Divorce Handbook, your Step by Step Guide to Navigating an Arizona Divorce. Give us a call here at 602.277.5369. Check him out at