re: HELOC Question

Im no lawyer so maybe I'm missing something, but I'm kinda confused by the question.

If the house is liquidated, the lien the HELOC has needs to get paid off.

That HELOC takes away from the value. The stake the other party has is only entitled to half of what's left.

The question of the HELOC's debt needing to be paid out of solely the Person 1's share is where it's gets messy. That probably can go any which way depending on the details of the case, the state in question, the phase of the moon, and if the judge got any the previous night.

Unless Person 1/Person 2 has some sort of legal document detailing how it would be handled.

Moral of the story: If you have anything worth having, and have more than one potential beneficiary, get a pre-nup, will, living trust, etc folks.

You aren't going to get a better answer here as we don't know the precise legal nature of ownership division and rights granted.

I'll comment though it's kinda fricked up to be given a share of a house and then give it to someone else upon your death with the gifting individual is still alive.