“A HOUSE DIVIDED AGAINST ITSELF CANNOT STAND”
– Abraham Lincoln, Republican State Convention (June 16, 1858), quoting Mark 3:25
Have you heard the one about the couple that split the house after their divorce? She got the inside, he got the outside. Or the story of this couple from Cambodia who cut their house in half after the wife refused to leave?
Bad jokes aside, typically the largest asset a couple has is their home and who gets ownership of the home after a divorce is a hot button issue. A client is often concerned about how long they may stay in the home during a divorce, how a court may divide the interest in the home, and how can they protect their interest in their home.
To answer that question you first have to determine whether the home is marital property. In a divorce proceeding, the court will equitably divide the marital property. Pursuant to the Marital Property Act, the trial court is then charged with making an equitable distribution of the property. However, you should not confuse “equitable” with “equal.”See Alston v. Alston, 331 Md. 496, 629 A.2d 70 (1993).
The Maryland Family Law Code defines marital property as the property acquired by one (1) or both parties during the marriage, including any interest in real property held as tenants by the entirety. §8-201(e)(1)(2). The Court of Appeals has held that absent evidence to the contrary, it is presumed that spouses hold the family home, including goods and furnishings, as tenants by the entirety. Arbesman v. Winer, 298 Md. 282, 468 A.2d 633 (1983).
Even property purchased prior to the marriage may be considered marital property, or partially marital. For example, if one spouse “gifted” the home to the other during the marriage (i.e. added the other spouse’s name to the title), if the property was held as tenants by the entirety, if the property was comingled with marital funds, or if marital funds were used for its enhancement (i.e. remodeling the home) the court could consider this marital property. See Brodak v. Brodak, 294 Md. 10, 447 A.2d 847 (1982); Noffsinger v. Noffsinger, 95 Md. App. 265, 620 A.2d 415 (1993); Mount v. Mount, 52 Md. App. 538, 476 A.2d 1175 (1984).
The Court will consider the following factors in determining how to divide the marital property: “(1) the contributions, monetary and non[-] monetary, of each party to the well-being of the family; (2) the value of all property interests of each party; (3) the economic circumstances of each party at the time the award is to be made; (4) the circumstances that contributed to the estrangement of the parties; (5) the duration of the marriage; (6) the age of each party; (7) the physical and mental condition of each party; (8) how and when specific marital property or interest in the pension, retirement, profit sharing, or deferred compensation plan, was acquired ...; (9) the contribution by either party of property described in [F.L.] § 8–201(e)(3) [ ] to the acquisition of real property held by the parties as tenants by the entirety;(10) any award of alimony and any award or other provision that the court has made with respect to family use personal property or the family home; and(11) any other factor the court considers necessary or appropriate to consider in order to arrive at a fair and equitable monetary award.”
As discussed below, the Court then has three options: the court may 1) award a party use and possession for up to a period of three (3) years; 2) transfer ownership of the home to one (1) party; or 3) order the home sold.
- Use and Possession:
The Court may award a custodial parent use and possession of the family home for up to three (3) years after the divorce. The intent is to preserve stability for the minor child(ren) and allow them to continue living in a familiar community and environment. This remedy is available when the parties have a minor child (minor child includes a child under the age of 18 but may include a person over the age of 18 but is still a high school student. The use and possession term will terminate at the end of the month in which the child graduates). §8-206; §8-210; Kelly v. Kelly, 153 Md. App. 260, 836 A.2d 695 (2003).
The family home is defined as the property “(i) was used as the principal residence of the parties when they lived together; (ii) is owned or leased by 1 or both of the parties at the time of the proceeding; and (iii) is being used or will be used as a principal residence by 1 or both of the parties and a child.” This does not include property before the marriage, by inheritance or gift from a third party, or excluded by valid agreement. §8-201(c)(1).
However, in some circumstances, Maryland courts have determined that homes owned prior to marriage and even where the parties did not live there together, are family homes under the statute.
In Bledsoe, the Husband argued that the property was not the family home under the statute because he had acquired it prior to marriage. The Court of Appeals held that property purchased entirely by one spouse but titled in the names of both amount to a gift and that, because it was the principle residence of the family, it qualified as the family home pursuant to the statute. Bledsoe v. Bledsoe, 294 Md. 183, 448 A.2d 353 (1982).
In Maness, the Husband argued that the home could not be considered the family home because he and his wife had never lived in the home together. The Wife moved into the home prior to the Husband and then, after the Husband had moved in, they slept in separate bedrooms. When the marriage ended, Wife moved out of the home. Nonetheless, the Court held that the home constituted a family home under the statute because it was the principal residence of the parties and a court could therefore award a party use and possession. Maness v. Sawyer, 180 Md. App. 295, 950 A.2d 830 (2008).
During the Use and Possession period the Court may order either or both parties to pay the rent/mortgage payments, including other debts associated with the home, maintenance, property taxes and insurance. §208(c). After the Use and Possession period has run, the court will order the property to be transferred or sold.
The court may transfer jointly owned property, used as the principal residence when the parties were living together, to the other spouse to avoid an inequitable division (the court cannot transfer the property of one spouse to the other. The Court will effectuate the transfer by ordering the transfer outright upon the release of the other party from any lien against the property, ordering that one party purchase the interest of the other, or a combination of both. The transfer of the property is subject to any lien (i.e. mortgage) on the property. § 8–202(a)(3),§8-205. The Court usually disfavors this method.
In the more common occurrence, the court will order that the property be sold and proceeds divided. In this situation, the court may also appoint a trustee to effectuate the sale of the home. A trustee is an attorney who will facilitate the sale of the home and will be compensated at the closing (in addition to closing costs, etc).
These are careful considerations and nuances that should be raised to your with skilled legal counsel who are not only aware of the various facets of the law and potential outcomes, but are equipped to present this evidence to the Court at the time of trial.