# Mortgage

Please indulge me; it’s one of my pet issues. And I apologize in advance for what may be my most boring blog post to date.

Writing math narratively is very difficult. When drafting a divorce settlement agreement, I try to include examples whenever formulas are written out. When reading decisions, I often draw a flow chart to help me follow the calculations.

Calculations done by the court establish rules of law. When an appellate court does it, that’s the way it’s going to be done in all cases like that in the future. All the more reason that the reader be able to follow and understand the calculations made by the court. For each calculation, you need to know how much went from where to where and why.

Sometimes, I can’t follow those calculations made by the court. Take the February 26, 2020 decision of the Second Department in Alliger-Bograd v. Bograd. The Court modified the equitable distribution credits awarded by retired Suffolk County Supreme Court Justice Carol MacKenzie; reducing from \$81,829.15 to \$23,350.00 the amount to be paid by a husband to the wife, in addition to the wife acquiring the husband’s interest in the marital residence.

I am not sure whether the decision provides all the numbers used to get to the final result. The marital residence being acquired by the wife was worth \$545,000.00 There was a mortgage and a Home Equity Line of Credit (HELOC) that totaled \$321,000.00. At first look, there was \$224,000.00 in equity.Continue Reading Math in Divorce Decisions: How Much Goes from Where to Where and Why?

It’s one of my pet topics. How do you provide — how do you write a provision awarding one spouse credit for paying down the mortgage principal while a divorce action is pending or thereafter?

Consider the August 29, 2018 decision of the Appellate Division, Second Department, in Westbrook v. Westbrook.

In April 2008, the wife commenced this action for a divorce and ancillary relief. In a pendente lite order, the Supreme Court, inter alia, directed the husband to pay temporary child support in the sum of \$150 per week. The court also directed the husband to pay a majority of the carrying charges on the marital residence, which included a first mortgage on the two-thirds share of the value of the marital residence that had been purchased from the husband’s siblings, as well as a home equity line of credit (hereinafter HELOC) that was secured by the marital residence.

On or about November 24, 2009, the parties executed a stipulation agreeing, inter alia, that the husband would have exclusive use and occupancy of the marital residence effective December 1, 2009, and that the husband would pay child support to the wife in the sum of \$350 per week commencing on December 1, 2009. Thereafter, the wife moved, inter alia, to increase the husband’s temporary child support obligation. In a pendente lite order dated May 21, 2010, the Supreme Court directed the husband to pay \$700 per week in temporary child support during the pendency of the action.

Following the trial, as is here relevant, Suffolk County Supreme Court Justice Marlene L. Budd declined to award the husband a credit for the payments made by him during the pendency of the action to reduce the principal balances of the first mortgage and the HELOC. In addition, the court directed that the marital residence be listed for sale, and that the husband make the payments towards the first mortgage and the HELOC if he continued to reside in the marital residence until the residence was sold.Continue Reading Calculating Divorce Credits for Mortgage and HELOC Payments

Once again, it has been made clear that where either or both spouses have assets or liabilities at the date of marriage, it is foolhardy (or at least imprudent) to enter the marriage without a prenuptial agreement and/or the assembly of proof of the extent, nature and value of those assets or liabilities.

Take the January 8, 2015 decision of the Appellate Division, Third Depatrtment, in Ceravolo v. DeSantis. In that case, the parties were married in July, 1996. The wife commenced the action for divorce in June, 2010. Acting Albany Supreme Court Justice Kimberly O’Connor determined, among other things, that the marital residence, which had been purchased by the husband prior to the marriage, was marital property and awarded the wife, among other things, half of its value. The husband appealed.

The Third Department agreed with the husband that Justice O’Connor erred in classifying the marital residence as marital property. Marital property is defined as “all property acquired by either or both spouses during the marriage” (Domestic Relations Law §236[B][1][c]), while “property acquired before marriage” is separate property (D.R.L. §236[B][1][d][1]).

#### Title is a critical consideration in identifying the nature of real property acquired before the marriage. The circumstances surrounding the purchase of the residence and the parties’ intent relative thereto are irrelevant to the legal classification of the residence as separate or marital property.

Here, the husband purchased the marital residence in January 1994 — 2½ years prior to the parties’ marriage — paying \$130,000 of his own funds and borrowing an additional \$100,000 from his father, secured by a note and mortgage. Although the wife contributed \$30,000 of her separate funds to the initial purchase of the residence, the husband took title to the property in his name alone.Continue Reading Title Controls Premarital Contributions To The Acquisition and Expenses of Property

Six years before the parties’ marriage in June 2000, the wife became the sole owner of real property, which would later become the parties’ marital residence. At the time of marriage, the wife owned the property free and clear of any liens or encumbrances. In 2005, apparently in an effort to consolidate debt, the husband

The August 21, 2013 decision of the Appellate Division, Second Department in Patete v. Rodriguez may have expanded the credits available to the non-titled spouse when marital funds are expended on a separate-property asset.

When New York adopted its Equitable Distribution Law in 1980, courts were now longer bound by which spouse held title to an asset generated during the marriage. Upon divorce, the non-titled spouse could be awarded an equitable share.

Not all property of parties getting divorced, however, is “marital property” subject to Equitable Distribution. The law recognizes as “separate property,” assets owned by one of the spouses either before the marriage, or acquired through inheritance, or by gift from someone other than the other spouse, etc. The appreciation in the value of separate property is also separate property, subject to a claim that such appreciation is due to the contributions or efforts of the non-titled spouse.

Determining what is or should be marital and separate property, and each spouse’s equitable share of marital property is not always clear. Indeed, the rules and guidelines are not free from doubt.

Take last week’s decision in Patete, for example. This divorce was the second time around for these parties. They married for the first time in 1978. Incident to their first divorce in 1981, the wife conveyed her interest in the 68th Street, Maspeth, Queens marital residence to the husband.

The parties married again in 1985. At that time the husband still owned the 68th Street home. Again it was used as the marital residence. As the home was the husband’s property before the second marriage, it was deemed his separate property when the second marriage here ended in divorce.

In 1987, two years into the second marriage, however, the husband sold the 68th Street property. \$125,000 of the proceeds were used to purchase the parties’ jointly-owned new marital residence on 64th Street in Maspeth.

The appellate court acknowledged that the 68th Street property remained the husband’s separate property until its sale in 1987. Thus, the \$125,000 in sales proceeds used to purchase the jointly-owned 68th Street home was also his separate property. The husband was entitled to a separate property credit for his use of separate funds to purchase the 68th Street home.

However, between the date of the second marriage and the sale of the 68th Street home, marital funds were used to pay the mortgage on the husband’s separate-property 68th Street home. As a result, the Second Department held:

#### The [wife] should receive a credit for one-half of the marital funds used to the pay this mortgage on the plaintiff’s separate property.

The Court reported that the total amount of marital funds used for this purpose was \$7,338.94.The Court did not state that this was the amount by which the principal amount due on the mortgage was reduced, just that such was the amount used to pay the mortgage.Continue Reading Credits on Divorce for Using Marital Funds for Separate Property Assets

In order to prevent the foreclosure of the marital residence, a court in a divorce action, and prior to judgment, may order the spouses to cooperate with a refinance application. Moreover, if the property is not successfully refinanced, the court, before divorce judgment, may compel a spouse to satisfy (at least) one half of the current mortgage in default.

Such was the holding of the Appellate Division, First Department, in its January 3, 2013 decision in Nederlander v. Nederlander. That decision unanimously affirmed the Order of New York County Supreme Court Justice Deborah A. Kaplan.

In this case, the bank was planning to foreclose on the marital residence. Until the wife made her motion, below, the husband had failed to submit a requested application and financial information to the bank. This was months after such was requested by the bank, and months after the wife submitted her information and application to the bank. The appellate court would not speculate whether the husband’s actions, which in effect contributed to the foreclosure, were by design or neglect.

The First Department based the authority to grant the wife her requested relief on Domestic Relations Law §234. That section empowers the court to determine questions of title to property and to “make such direction, between the parties, concerning the possession of property, as in the court’s discretion justice requires having regard to the circumstances of the case and of the respective parties.”Continue Reading Husband in Divorce Action Ordered to Refinance Home, or Pay Off Half of Mortgage Balance

Distinguishing the 2009 Court of Appeals decision in Mahoney–Buntzman v. Buntzman, the Second Department, in its October 24, 2012 decision in Levenstein v. Levenstein, has held that if marital funds are used to pay pre-marital support arrears, the non-obligated spouse may be awarded a credit towards equitable distribution.

In 1995, before the current marriage, Mr. Levenstein was convicted in the United States District Court for the Eastern District of Virginia, for the failure to pay child support (see 18 USC § 228). Incident to the criminal conviction, he was directed to pay arrears of \$132,718.49 to his first wife by July 13, 1995. Mr. Levenstein failed to fully satisfy that obligation by that deadline.

Thereafter, the husband remarried twice. The second remarriage took place four years after the criminal conviction, but before the husband secured a divorce from his second wife. During the purported third marriage, the husband paid the remainder of his criminal restitution obligation, and made additional child support payments to his first wife that became due during the purported marriage.

In 2006, the third wife sought an annulment for bigamy. In 2008, grounds were established and a trial was held to determine the apportionment of the putative marital debt. In a decision dated February 25, 2009, now-retired Rockland County Supreme Court Justice Alfred J. Weiner awarded the wife a credit of 50% of the marital funds used to satisfy premarital maintenance and child support obligations that the defendant had paid to his first wife, including the amounts due under the criminal judgment. A judgment of annulment was entered in April, 2009.

One month later, in May, 2009, the Court of Appeals held in Mahoney–Buntzman v. Buntzman (12 N.Y.3d 415) that a spouse is not entitled to a credit for marital funds paid to a former spouse or a child pursuant to an order of maintenance or child support.

Based on Mahoney–Buntzman, Mr. Levenstein moved for a reconsideration of the decision which had granted the 50% credit. Justice Weiner granted the husband’s motion and denied the credit. The putative marital debt was reapportioned accordingly.

On appeal, the Second Department reinstated the credit. The appellate court noted that in Mahoney–Buntzman, the wife had sought credit for maintenance payments made to the husband’s former spouse that had become due and were paid during the marriage. In holding that such payments were not subject to recoupment by the wife, the Court of Appeals reasoned that maintenance obligations to a former spouse and to children pursuant to a support order “are obligations that do not enure solely to the benefit of one spouse.” Nevertheless, the Court of Appeals cautioned:

This is not to say that every expenditure of marital funds during the course of the marriage may not be considered in an equitable distribution calculation. … There may be circumstances where equity requires a credit to one spouse for marital property used to pay off the separate debt of one spouse or add to the value of one spouse’s separate property.”

Continue Reading Payment of Husband's Pre-marital Support Arrears Results in Equitable Distribution Credit to the Wife

Dealing with the appreciation in value during the marriage of a marital home owned by one spouse before the marriage has been, perhaps, the most troublesome area of New York’s Equitable Distribution Law. Inconsistencies in decisions abound. The entire area may have been turned on its head in 2010 by the Court of Appeals in

The May, 2011 decision of the Appellate Division, Second Department, in Many v. Many, seems, at first blush, to be a rather routine matter. While their divorce action is pending, the interests of the parties are balanced. However, below the surface lurk issues which highlight the frustration and anxiety which spouses must feel as their case is squired through the judicial process.

By Order to Show Cause issued June 13, 2009, two years before this decision, the wife sought interim support.  She also sought a restraint against her husband refinancing the marital residence. One may surmise that Mr. Many was sole owner of the home; it was his “separate property,” subject to his wife’s claim to an equitable share.

Ms. Many received her award of temporary maintenance. However, by his Order of April, 2010, Supreme Court, Westchester County, Justice Edgar G. Walker, denied that branch of Ms. Many’s motion which was to restrain her husband from encumbering the marital residence.  In effect, Mr. Many was authorized to refinance the equity in the marital residence, but restricted from using the funds for any purpose other than paying his pendente lite maintenance obligation.Continue Reading When Mortgaging the Marital Residence Is Necessary to Pay Temporary Support

Have you looked at an IRS Form 1040 (pdf) lately?

Looking at the 1040 is supposed to begin the C.S.S.A. calculation for determining child support.  For actions commenced on or after October 13, 2010, it is also the first step when determining temporary maintenance. When computing child support under either the Family Court Act or the Domestic Relations Law, the calculation starts with a determination of parental income. F.C.A. §413(c)(1) or D.R.L. §240(1-b)(c)(1). Determining parental income under either F.C.A. §413(b)(5)(i) or D.R.L. §240(1-b)(b)(5)(i) begins by looking at the:

gross (total) income as should have been or should be reported in the most recent federal income tax return.

The recent amendment to D.R.L. §237(B) adopts the C.S.S.A. definition to begin the calculation of a temporary support award under D.R.L. §237(B)(5-a)(b)(4):

“Income” shall mean:

(a)  income as defined in the child support standards act . . . .

There actually is a line on the federal income tax return which reports the “total income.”  It’s line 22:

Although “gross” income is a term in the statute, but not the 1040, its context is made clear when reference is made to the calculation of Adjusted Gross Income which begins on line 23.Continue Reading "Gross (Total) Income" for the Purposes of Child Support and Temporary Maintenance