Two People Sign the Mortgage. One Pays. Who Owes Whom?
When two individuals sign a mortgage, they enter into a joint obligation. It’s easy to assume that each carries half the debt. But what happens when one person ends up paying far more than the other? Can the person who paid demand reimbursement? In a Florida appellate decision, the court considered when one co-obligator can seek contribution from the other, and why a settlement with the lender doesn’t necessarily erase the underlying financial responsibility between co-borrowers, demonstrating it’s not always as simple as looking at who paid the lender.
The Shamiehs and Daher Case
In 2006, the Shamiehs and Daher executed a mortgage and promissory note to purchase real property in Okaloosa County, Florida. They were jointly and severally liable under the mortgage and note, meaning each party was responsible for the entire debt. However, the mortgage and note did not specify their rights to seek contribution from one another in the event of a default. Fast forward to 2012, both parties defaulted on the loan, leading the lender to initiate foreclosure proceedings against them.
Eventually, the parties negotiated separate settlements. Daher settled with the lender first, receiving a release from the claim. Several years later, the Shamiehs settled their own claims with the lender by paying $1 million and transferring property to the lender. They then sought $500,000 from Daher, arguing that they had paid more than their fair share of the common obligation.
So, Does the Other Borrower Owe You?
Generally, Florida’s doctrine of equitable distribution is designed to prevent one person who shared a common debt from being left carrying more than that person’s fair share. The law presumes that co-obligators share the obligation equally unless an agreement or other circumstances establish otherwise.
Initially, the trial court ruled in favor of Daher, concluding that his settlement with the lender severed his obligation to the Shamiehs. The Shamiehs appealed. The appellate court rejected the argument that Daher’s settlement with the lender automatically ended his obligation to the Shamiehs. The lender’s decision to release him did not determine what was fair between the co-obligators.
But there was a catch. The Shamiehs could not assume half of their $1million settlements were automatically owed by Daher. This is because the common obligation was not necessarily the entire settlement amount. The parties were jointly liable for the principal, but the debt could also involve interest, late charges, taxes, and foreclosure-related legal fees. The appellate court noted that some of those additional costs might not fairly be attributed equally, especially because the Shamiehs had continued litigating after Daher settled.
The appellate court therefore sent the case back for further fact-finding to determine the appropriate contribution amount.
The Lesson
Signing a mortgage with someone else creates financial consequences that can continue even after the lender releases one of you. Who ultimately owes whom may depend not on who paid, but on the actual common debt, the terms of the agreement, and the circumstances surrounding the payment and settlement. Before assuming you are entitled to half or that you owe nothing, it’s important to have the underlying obligation and settlement reviewed.
Contact Us for Legal Help
If you are dealing with a shared mortgage, co-borrower dispute, or contribution claim, contact our Miami civil appeals lawyer at Valero Law today by calling 305-607-7011 to understand your rights and discuss your options. We serve clients in Davie, Coconut Grove, Broward County, and Miami-Dade County.
Source:
scholar.google.com/scholar_case?case=13700686585709929172&q=FAYEZ+SHAMIEH+andAMAL+SHAMIEH,+Appellants,v.+HCBFINANCIAL+CORP.,as+successor+in+interest+to+First+NBC+Bank,+as+successor+in+interest+to+Central+Progressive+Bank+by+acquisition+of+assets+from+the+FDIC,+as+receiver+for+Central+Progressive+Bank,+and+ESTEPHAN+D.DAHER&hl=en&as_sdt=4,10
