New York Appellate Court Considers Whether a Marital Residence, Purchased Before the Marriage, Can Become Marital Property

By Karthikc123 (Own work) [Public domain], via Wikimedia CommonsNew York law generally categorizes property acquired during a marriage as “marital property,” meaning that the property belongs to both spouses regardless of who holds title. Property owned by one spouse before the marriage is considered that spouse’s “separate property.” In some situations in a divorce proceeding, one spouse may have an equitable claim to the other spouse’s separate property, or may be able to claim that certain separate property has become marital property over the course of the marriage. A New York appellate court recently considered a situation in which both spouses contributed to the purchase of an asset titled in the husband’s name, the marital residence, prior to the marriage. Its decision in Ceravolo v. DeSantis held that the residence remained the husband’s separate property, but it recognized that the wife may have an equitable claim for reimbursement. A dissenting justice concluded that the residence should have been deemed marital property.

The parties married in July 1996. More than two years earlier, in January 1994, they purchased the residence at issue in the appeal. The husband-to-be paid $130,000 of his own money and obtained a $100,000 loan from his father, which was secured by a note and mortgage. The future wife contributed $30,000 towards the purchase price but did not attend the closing. The husband took title to the property in his name alone, and the title remained unchanged throughout the marriage.

The wife made all payments on the mortgage, beginning shortly after closing, and continuing until the mortgagor released the lien in 2003. The wife filed for divorce in June 2010. After a trial, The Supreme Court in Albany County, New York entered a judgment of divorce in March 2013. It ruled that the wife’s mortgage payments converted the property from separate to marital property. It awarded the wife $170,000, which was one-half of the stipulated value of the residence. The husband appealed this and other parts of the divorce judgment.

The appellate court, in a 2-1 ruling, found that the trial court erred in ruling that the residence was marital property. It noted that the Equitable Distribution Law (EDL), enacted in 1980, was based on the view of marriage as an “economic partnership.” This partnership only comes into existence when the marriage begins, the court stated, and therefore the EDL is only concerned with financial transactions that occurred after the marriage. The trial court’s ruling was based on pre-marriage transactions, namely the wife’s mortgage payments on the residence. The appellate court reversed this part of the Supreme Court’s order. It remitted the case for additional proceedings, with instructions to the trial court to address any equitable claims the wife may have to the residence.

One justice dissented, finding “that the majority place[d] undue emphasis on title” rather than “the true equitable interests of the parties in this property,” and stating that this is precisely the sort of outcome the EDL “was intended to prevent.” The dissent cited two New York appellate cases, 1996’s Ciaffone v. Ciaffone and 1999’s Matwijczuk v. Matwijczuk, which found that contributions by one spouse to the other spouse’s separate property converted it to marital property. The majority disagreed with this interpretation and stated that this reading of Ciaffone and Matwijczuk “should no longer be followed.”

A divorce proceeding is likely to present a wide range of issues that will be both legally and emotionally difficult. A New York City family law attorney with experience in the city’s court system can help you understand your rights and guide you through the process of planning and preparing your divorce case. Ingrid Gherman has practiced family law in New York City for the past 30 years. Contact us online or at (212) 941-0767 today to schedule a confidential consultation with a member of our team.

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Photo credit: By Karthikc123 (Own work) [Public domain], via Wikimedia Commons.