As an Arizona State Bar Certified Specialist in family law matters my client’s cases often have issues in which one party is making a claim against property of the other spouse. These can be difficult and complex issues.
Under Arizona law, the general rule is that items purchased during the marriage belong to the community, and items purchased prior to the marriage, or received during the marriage by gift or inheritance, are still the sole and separate property of the party receiving such property.
However, in some situations, this results in unfairness, and the Court can make “equitable” or “fairness” adjustments as exceptions to the general rules stated above.
For example, if Husband purchased 100 shares of IBM stock prior to the marriage, and they went up in value during the marriage because stock generally trends upward over time, the stock which was Husband’s before the marriage would remain Husband’s through the divorce and Wife would not receive any of the 100 shares, nor would she be able to claim any interest in the increase in value of the stock during the marriage.
However, assume that Husband purchased a house a month before the marriage, and titled it in his name only as a single man. He put in a very minimal 2% down payment, and got a 30 year mortgage. The parties are married the following month, and reside in the house for 30 years while the mortgage is paid off. Other than the minimal down payment, the entire mortgage was paid off by money earned by both parties during their marriage. In such cases, the Court must still recognize the house as Husband’s sole and separate property, as it remains titled in his name. It is legally his sole and separate property as the title was never changed. However, Wife can still argue for an “equitable” or “fairness” lien against the property. The Court would likely see that approximately 98% (we can help with the math on a case by case basis) of the mortgage was paid by the community, and not by Husband alone. Wife would likely be successful in arguing that the community has an equitable lien of 98%, half of which she would receive. Accordingly, the Judge would affirm that the house was Husband’s, but would order Husband to pay Wife 49% (half of 98%) of the value of the house, or to provide Wife with other assets to equalize and balance this out.
Similar situations arise when a house belongs to one spouse, but the parties then use money earned during the marriage to remodel, add on, put in a pool, upgrade landscaping, add a garage, etc. In such cases, the community may be entitled to a lien based on the enhanced value from the addition, remodel, or upgrade.
Calculations of equitable liens and enhanced value are very complicated. While the math itself is only somewhat complicated, the acquiring and presenting evidence, documents, and testimony to properly support such claims can be very difficult, and should not be done without an experienced attorney.
If you are involved in a divorce, legal separation, or annulment case or other family law case, and if you have determined that you need experienced legal representation, please call 480 733-6800 and ask to speak with Douglas C. Gardner, or visit our website at www.yourarizonadivorcelawyer.com.