Under New York law, property acquired between the date of marriage and the filing for divorce is generally classified as marital. Property owned by one spouse before the marriage is considered that spouse’s separate property. However, there are situations where the lines separating marital from separate property are unclear.
Some of the most contentious and challenging situations involve marital residences that were owned by one of the spouses prior to their marriage. In such situations, courts have turned to various legal theories in their efforts to give some compensation to the non-titled spouse. Many trial court judges correctly find that it is unfair to award the entire value of a residence to the titled spouse, particularly where both parties contributed to the physical and financial upkeep of the residence over a period of many years. In such instances, some judges have held that a house constitutes marital property, even though it is titled solely in the name of one party. In other situations, judges have turned to equitable theories, such as constructive trust, to provide relief to both spouses.
During the past two years, New York’s appellate courts have issued several decisions that offer guidance on how a court is likely to treat a marital residence that was owned by one spouse prior to the marriage. The following are the most common situations, together with the likely outcome for each:
PRE-MARITAL HOME CONVEYED TO PARTIES JOINTLY DURING MARRIAGE:
Sometimes, an asset that was owned by one of the parties prior to their marriage becomes titled in the names of both parties during the marriage. This was the situation in Alecca v. Alecca, 975 N.Y.S.2d 801 (Third Dept. 2013). In Alecca, the husband held sole title to the marital residence prior to the marriage, but he conveyed the house to the parties jointly approximately one year after the date of their marriage. The appellate court concluded that this created a presumption that the house became marital property under a legal theory known as “transmutation”.
PRE-MARITAL HOME THAT REMAINS TITLED IN THE NAME OF ONE SPOUSE:
Where one of the spouses continues to hold sole title to a house, the options available to the court are more limited. The recent decision by a New York appellate court in Caravolo v. DeSantis, 1 N.Y.S.3d (Third Dept. 2015) is an example of how little a court can do, despite the efforts of a trial judge to effectuate fairness. In Caravolo, the home was purchased by the husband before the marriage, and the wife was never added to the title. The trial (lower) court found that as a result of the wife’s financial and nonmonetary contributions toward the house, she had a acquired a marital interest in it. The appellate court disagreed. The appellate court based its decision, in part, on the fact that many of the wife’s contributions occurred before the parties were married. However, the appellate court did not rule out the possibility that the wife was entitled to compensation, and it remitted the case for additional proceedings regarding the wife’s claim for recoupment of marital funds applied to the residence. That claim would be under the equitable theory of “constructive trust”, as opposed to distribution of marital property.
It should be noted that in Caravolo, one of the appellate court justices issued a dissenting opinion which made a compelling argument that in light of the wife’s substantial contributions toward the home, the house should be deemed marital property and divided accordingly.
If you have questions regarding a matrimonial matter, contact us today at (212) 382-1600 for experienced guidance. We offer confidential consultations at our offices in lower Manhattan. Marc Rapaport has been practicing matrimonial law in New York City since 1995.