When a gambling addiction affects ‘home sweet home’

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Published Date 4/26/2024

It’s the nightmare we think only happens in the movies. “We have to pack,” says a sleep-deprived, forlorn soul when his wife opens the door. “I lost the house in a poker game.”

As Realtor.com’s Lisa Marie Conklin reminds gambling is no small part of American life. “First, baseball superstar Shohei Ohtani‘s interpreter allegedly stole millions from his boss to gamble. Then, on April 17, the NBA imposed a lifetime ban on Jontay Porter, a forward for the Toronto Raptors, for betting against his team.” She says Porter used a gambling app to place his bets, and the ease of using these apps has seen gambling addictions soar recently. As many as 20 million Americans have gambling problems or are at risk, according to QuitGamble.com.

Gambling addiction can lead individuals to make irrational decisions, including using assets like a house as collateral for gambling debts, says Conklin. “Some homeowners, desperate to settle their debts, might be tempted to get extra cash with a home equity loan (HELOC) or even sell their house—without their spouse’s knowledge. Gambling, like alcoholism and drug addiction, can be a disease. And those diseased individuals are often desperate.

“Luckily, despite what you see in the movies, your spouse can’t throw a deed into the pot in Las Vegas and gamble away your house. In most jurisdictions, gambling debts are not legally enforceable in court,” says Conklin.

Still, there are some pretty risky things a spouse can do without your knowledge. While it may only take one person in a couple to buy a house, it usually takes two to sell it. As for taking out home equity loans and selling a house behind the other spouse’s back? “Well, it can get complicated,” says Conklin. “Whether one spouse can sell a marital home without the other knowing depends on the laws and circumstances of their state.”

She says it all comes down to several factors, such as who is on the deed, if the house is considered separate or marital property, and the community property and common laws that apply in your state.

It may be a huge temptation for a gambling spouse to get more money to ante up or to pay off the debt they racked up using a home equity loan, a refinance, or even a reverse mortgage without telling the other spouse. Conklin shakes her head on this one. “In most cases, one spouse cannot use a jointly owned house to get secret cash without the knowledge or consent of the other spouse, primarily if the title lists both spouses as owners of the property.”

New Jersey-based family law attorney Jamie Berger adds, “Typically, if both spouses are on the deed, any lender will require both parties to take out the loan or require that the party not taking on the liability sign an affidavit indicating that they agree with the other party attaching a lien to the property.”

But what about selling a home behind a spouse’s back? According to a Michigan-based attorney, Derk Jacques, “It would only be possible to legally sell the home if one spouse had power of attorney over the other or if there is some stipulation in a divorce settlement.” Even if a homeowner tries to sell a home privately or hire an agent, similar documentation is required. All owners of record sign or have documentation showing any authorization for someone else to sign on an owner’s behalf.

As for instances of marital discord where one spouse tries to sell a property out from under his or her spouse — without the other’s knowledge — the situation typically involves deceptive or illegal practices, resulting in legal battles and complications.

“If your spouse tries to sell a jointly-owned property without your permission, you might have legal recourse to challenge the sale and seek remedies through the court system,” says Conklin. “Legal options might include seeking an injunction to stop the sale, pursuing civil action for damages, or addressing the matter as part of divorce proceedings.”

When only one spouse is on the deed? Shudder at the thought. “It would be significantly easier to prevent your spouse from knowing about a HELOC or reverse mortgage if they aren’t on the deed, as this could mean they don’t have an ownership stake in the house,” says Jacques. “Likewise, if only one spouse is on the deed, then that spouse can absolutely list the house for sale.”

If, however, you live in a state that provides for equitable distribution, the spouse with the gambling debt doesn’t necessarily receive all the money from the sale of the house. For example, Jacques practices in an equitable distribution state, meaning property is divided “equitably” but not equally. “One spouse can retain ownership rights to the home, but the other may end up with a bigger share of any joint bank accounts,” he says.

Conklin urges you to consult an attorney immediately if you suspect your spouse might try to take out a loan against the house or sell it without your consent. Legal experts agree that you can file a motion with the appropriate court to prevent such action, which will put the other spouse on notice that you are protecting your rights to the equity in the property.

And if you’re the one thinking of selling without telling? Think again. You could be nailed for fraud, and Judge Judy won’t offer pity.

Realtor, TBWS

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