Typically, a divorce action involves equitable distribution of marital assets, which are resources acquired during the marriage. Equitable distribution of assets can range from dividing jewelry, cars, furniture and retirement accounts. Perhaps the most common marital asset sought to be equitably divided though is a marital residence. The most common options for parties to a divorce action is, one spouse buys out the other spouse’s equitable portion in the home and becomes the “new owner” solely upon the judgment of divorce – and vice versa with the other spouse making the same offer – or the parties selling the marital residence and thereafter equitably dividing the proceeds from the sale of the house.
PROPERTIES PRIOR TO THE MARRIAGE
One issue which may arise – and did in fact come up during one of my recent trials – is determining a spouse’s rights to a house purchased prior to the marriage. In this particular case, a same-sex couple was dating for several years before deciding to jointly purchase a house. Less than a year after their purchase, the parties married. Three years later, one party sued for divorce and served her wife with a summons and complaint. While the plaintiff’s complaint sought “equitable distribution” of the marital residence, the relief requested did not fully contemplate the issues which lay ahead at trial. The night before the trial was to commence, plaintiff’s attorney contacted me to tell me he had “an epiphany” and was up the entire night thinking about legal issues complicating the divorce action. While I knew where my adversary was likely heading with the conversation because I had the same epiphany, I heard him out. “The court cannot force the sale of the marital residence since it was purchased before the parties were married,” he told me on the phone. Although I did not admit this to him, he was right! The legal issue at trial, thus, became whether or not a court in a divorce action is empowered to order the sale of a home purchased by two litigants before they married. Put simply, does a matrimonial judge have the jurisdiction and authority to invoke his broad discretion when the asset in question was not truly a “marital asset” and not subject to equitable distribution laws?
VARIOUS FORMS OF OWNERSHIP
The answer to this can be ascertained by understanding the various forms of ownership in real property. In most divorce cases, spouses jointly own property purchased during the marriage, creating an interest in property known between the husband and wife as “tenants by the entirety.” This means that each spouse has a right of survivorship over the property and neither party can terminate his/her spouse’s interest in the residence without the consent of the other. Conversely, tenants in common is typically created in business purchases among partners, for instance, while a joint tenancy is established in domestic partnerships. While a boyfriend/girlfriend or same-sex couple may decide to buy a property together, issues most definitely arise later upon marriage. This is precisely the legal issue which transpired in the aforementioned case, and which will likely happen more often in the LGBT community where marriage has become recognized and legalized in most states over the course of the past decade.
When they purchased their home, my client and her wife owned the property as joint tenants with rights of survivorship. The fact that they later married did not, in and of itself, transform their ownership to tenants by the entirety (the automatic spousal ownership interests). Thus, at their divorce trial, the judge could not order the sale of the residence nor could he make decide equitable distribution since it was outside the trial court’s jurisdiction and beyond the scope of the judge’s “broad” rights to order same. The parties’ sole legal remedy was a partition action. However, the dilemma was that a partition was not requested in the complaint. The parties’ options were limited to filing a separate action for a partition – which would take months longer and delaying the trial – amending the complaint, or creatively structuring a stipulation modifying the relief requested in the instant complaint. Luckily, I was able to quickly think on my feet and I convinced my adversary to stipulate to limiting testimony to contributions made by each party as part of a partition action, so long as I also agreed to the plaintiff having exclusive use and occupancy, and not forcing the sale of the residence. We had no choice, and given the circumstances, it was tantamount to an equitable distribution determination by the judge of each party’s credits. So, our trial was limited to those narrow issues.
In a case similar to mine also involving a lesbian marriage, the plaintiff in that action filed for divorce in Westchester County Supreme Court but discontinued her case shortly thereafter. Taylor v. Taylor, 30 Misc. 3d 1240(A), 1240A, 926 N.Y.S.2d 347, 347, 2011 N.Y. Misc. LEXIS 1135, *2, 2011 NY Slip Op 50413(U), 2 (N.Y. Sup. Ct. March 22, 2011). Months later, the Plaintiff commenced a partition action against her wife seeking the sale of the property and an accounting of the proceeds from that sale. Defendant moved to dismiss her wife’s complaint. She argued that since the parties were still married, the court could not direct the sale of the premises unless it also altered the legal relationship between the parties. Id. The plaintiff countered by arguing that she and the defendant purchased the property before their marriage as “tenants in common,” and thus, their ensuing marriage did not change their rights and interests in the residence. Accordingly, plaintiff argued, the property was not subject to the laws of equitable distribution. Id. at *2-3. The Court agreed with the plaintiff and opined that since the home was purchased prior to the marriage as tenants in common, it was not a marital asset. Id. at *4. It concluded that “Plaintiff as a tenant in common with defendant, regardless of the marital status, has a right to maintain an action to partition real property,” and thus, ordered that the property be partitioned. Id.
Regardless of the outcome in Taylor, it is axiomatic that the remedy of partition “has always been subject to equitable considerations between the parties and, in a partition action between spouses, the matrimonial court is in the best position to evaluate these equitable considerations.” Quattrone v. Quattrone, 210 A.D.2d 306, 307 (2d Dep’t 1994). In partitioning a property at issue, a court must consider “the separate contributions to acquisition and improvement of the property” by each party. Id. See also, Novak v. Novak, 516 N.Y.S.2d 878, 878-879 (N.Y. Sup. Ct. 1987) (as “joint tenants, their interests are partitionable, on the basis of their separate contributions to acquisition and improvement”).
Accordingly, in the aforementioned cases, the law appears to support the position that couples purchasing a property prior to marriage – as domestic partners or friends may do – will be deemed to be joint tenants or tenants in common. The law will not alter their form of ownership to a tenancy by the entirety due to a subsequent marriage. Therefore, should one party wish to divide or force the sale of his/her right in the property at stake, a partition action is the sole recourse available and a court will not apply equitable distribution laws to a later divorce proceeding. Each party will have to prove at trial his/her separate credits and contributions towards the property. This includes any down payments, mortgage contributions, and capital improvements to the subject property. The court will thereafter weigh each party’s contributions in the partition action and tally the financial interests for each in its findings of fact. The Court may very well force the sale of the residence insofar as the party seeking the partition action has greater financial interests in the property. Needless to say, these ownership interests are atypical and foreign to divorce proceedings. But this does not mean one should not be prepared for the inevitable outcome in case his/her property interests are structured as a different form of ownership.
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