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

What is the effect of a divorce settlement stipulation provision, incorporated in the judgment of divorce, that calls for a specified reduction in child support upon the emancipation of one of the children of the parties?

The fact pattern is almost routine. For example, say the parties have three children, 14, 17 and 19. Their divorce settlement tracks the C.S.S.A. Upon the first emancipation (presumably when the 19-year old turns 21, or, perhaps graduates college according to the definition of emancipation in the agreement), the stipulation provides that the child support obligation will go from $2,900 per month to $2,500 per month (tracking the reduction in the formula obligation from 29% for three children to 25% for two children). Assume the full stipulation is incorporated by reference into the parties’ divorce judgment.

Continuing the example, assume that upon the first emancipation, the child support payor in fact reduces his/her payment from $2900 to $2500, but does not have that reduction established by a new court order. A year later, the support recipient goes into court to seek 12 months of $400/per/month arrears. What happens?

Consider last month’s decision of the Appellate Division, Second Department, in Beckmann v. Bedckmann. There, the parties’ 2012 divorce judgment incorporated, but did not merge with, their 2011 stipulation of settlement. The parties had agreed that the husband would pay $700 semi-monthly in basic child support for their two children. In April 2013, the parties’ daughter became emancipated under the terms of the stipulation, and shortly thereafter, the husband reduced his child support payments from $700 to $476 semi-monthly [I am going to dangerously assume that an agreement that defined emancipation would also provide what was to happen on emancipation].

Continue Reading Divorce Settlements that Provide for Reductions in Child Support upon Emancipation

A court will not provide for a reduction in child support upon the emancipation of the elder of two children when the parties’ divorce settlement stipulation, itself, does not provide for one. So held the Appellate Division, First Department, in its 3-2 December 29, 2015 decision in Schulman v. Miller.

That settlement stipulation required the husband to pay unallocated periodic child support for the parties’ two children, plus cost of living adjustments, as well as other expenses of each child, including education and college. It did not provide for the reduction or recalculation of the husband’s child support obligation upon the emancipation of the older child. The agreement did not allocate the husband’s child support obligation as between the children, nor provide a formula for a reduction in the event of one child’s emancipation.

Affirming the order of Supreme Court, New York County Justice Lori S. Sattler, the appellate court noted that the settlement stipulation did provide for a termination or reduction of certain of the husband’s financial obligations upon the happening of specified events, including, for example, his obligation to pay maintenance to the wife, his obligation to maintain medical insurance for each child, payments for car service, and the like. Thus, the settlement provision concerning medical insurance explicitly stated that the husband “shall have the right to terminate such coverage for either Child at the time she becomes emancipated.” The parties’ stipulation of settlement was an exhaustive, 62-page document. Both parties were represented by counsel during its negotiation (indeed, the husband himself is an experienced attorney).

Continue Reading Absent Provision in Divorce Agreement, No Reduction in Child Support on Emancipation of Elder Child

The required C.S.S.A. recitation in an oral open-court stipulation by which the parties explain why they have agreed to a child support obligation varying from the presumptive C.S.S.A. formula may not have to be as “precise” as that required in a written stipulation. Such appears to be the holding of the Appellate Division, Second Department, in its January 22, 2014 decision in Rockitter v. Rockitter.

On August 9, 2010, the parties had entered two stipulations to settle their divorce action. A written stipulation covered the parties’ joint custody of their two daughters. The second stipulation was oral, made on the record in open court and concerned child support and equitable distribution. Both stipulations were subsequently incorporated, but not merged, into the parties’ judgment of divorce.

Approximately 18 months later, the ex-wife commenced this action seeking to vacate the child support provisions of the oral support stipulation and the judgment of divorce. The ex-wife alleged that the support stipulation failed to comply the Child Support Standards Act because the parties did not make the required recitation of the reasons they chose to deviate from C.S.S.A. guidelines. Nassau County Supreme Court Justice Norman Janowitz granted the ex-husband’s motion to dismiss the complaint. The Second Department affirmed.

The C.S.S.A. requires that any agreement varying its presumptive child support formula contain specific recitals:

  • (1) that the parties have been made aware of the C.S.S.A.;
  • (2) that they are aware that the guidelines would result in the calculation of the presumptively correct amount of support;
  • (3) that in the event the agreement deviates from the guidelines, it must recite the presumptively correct amount of support that would have been fixed pursuant thereto; and
  • (4) the reason for the deviation.

Continue Reading C.S.S.A. Recitiation Requirements Relaxed for In-Court Child Support Sipulation

The emancipation of a child does not automatically result in the downward modification of an unallocated order of child support. Rather, the support payor has the burden of proving that the existing  amount of unallocated child support is excessive based on the needs of the remaining unemancipated children.

Such was the holding of the Appellate Division, Second Department, in its May, 2013 decision in Lamassa v. Lamassa.

In this case, the parties had entered into a stipulation of settlement of their divorce action that was read into the record. Then when the parties eldest child turned 18, the father unilaterally, and without a court order, reduced his child support payments. He then further reduced the amount of the support payments each time one of the parties’ remaining three children reached the age of 21 years.

Only then did the father move, in effect, to reduce the amount of child support payments and to cancel child support arrears accruing before that application.

At the hearing before Supreme Court, Richmond County Court Attorney/Referee Fay M. de Grimston, the father testified that as each of the children reached 21 years of age, he reduced the amount of support payments. He claimed that the mother had accepted the checks from him without objecting orally or in writing. The mother denied that she agreed to a reduction of the support payments. She claimed that she did not receive any checks directly from the father, but rather from the children. She asked the children to tell the father that the amount was wrong.

The mother also testified about an (unspecified) attempt to enforce the child support obligation. In addition, three of the parties’ children also testified and stated that the support checks were given to them to pass on to their mother; and that they never saw the father give checks directly to the mother (two of the children were still living with the mother at the time of the hearing).

The Referee concluded that the father was not entitled to a reduction in the amount of the support payments, or to cancellation of support arrears. The father had unilaterally reduced his support payments without court order, but had not provided credible proof of an oral agreement to modify the support obligation.

Affirming the determination that the father was not entitled to retroactive relief, the Second Department held that the father was not entitled to a reduction of the amount of child support payments, or a cancellation of child support arrears:

When child support has been ordered for more than one child, the emancipation of the oldest child does not automatically reduce the amount of support owed under an order of support for multiple children. In addition, a party seeking a downward modification of an unallocated order of child support based on the emancipation of one of the children has the burden of proving that the amount of unallocated child support is excessive based on the needs of the remaining children.

Continue Reading Emancipation Of One Child Does Not Automatically Result in a Downward Modification of Unallocated Child Support

Father and daughter.jpgParents sometimes enter child support agreements which track the presumptive formula set out in New York’s Child Support Standards Act (Family Court Act §413; Domestic Relations Law §240[1-b]). However, parents in their agreements often deviate from the presumptive formula to reflect various considerations. That deviation for a married couple may reflect the delicate balancing of property rights, spousal maintenance and child support.

For example, parents may reduce the presumptive child support amount where the child(ren) spend more time with the “non-custodial” parent than what might be considered the “normal” alternate weekends and a mid-week dinner.

May the non-custodial parent’s failure to fully exercise visitation rights under an agreement serve as a basis to increase child support?

In its July 11, 2012 opinion in McCormick v. McCormick, the Appellate Division Second Department said, “Yes.” It found that the substantial reduction in a father’s visitation with his child warranted an upward modification of the father’s child support obligation. That reduction in visitation provided the substantial change in circumstances needed to justify a support modification.

[T]he mother established that an increase in the father’s child support obligation was warranted by a change in circumstances … Specifically, the substantial reduction in the father’s visitation with the child, which significantly reduced the amount of money the father was required to spend on the child, “constituted an unanticipated change in circumstances that created the need for modification of the child support obligations.”

The Second Department was quoting from the 2002 decision of the Court of Appeals in Gravlin v. Ruppert, 98 NY2d 1, 743 NYS2d 773. That case also addressed a father’s failure to live up to his scheduled substantial parenting time.

Continue Reading Father's Failure To Visit Child Is Grounds To Increase Child Support

Calulator on 100s 11 red.jpgThe way you phrase the credit is just as important as the amount.

Let’s assume that when the divorce action was filed, the parties’ marital residence was encumbered by a mortgage with a principal balance of $250,000.

Let’s further assume that while the divorce action is pending, the wife, only, makes all the mortgage payments.  The parties get divorced three years later and the marital residence is then sold.  At the time of sale, solely due to the payments of the wife, the mortgage principal has been reduced to $200,000.  Finally, assume there are $300,000 of sales proceeds remaining after paying off the mortgage, the broker and other closing expenses.

Is the wife entitled to a credit for “her” $50,000 reduction of the mortgage, and if so, how much?

That was the issue facing the Second Department in its March 8, 2011 decision in Le v. Le.  In that case, the Court modified the decision of Westchester County Supreme Court Justice Linda Christopher  which, I believe, correctly awarded the wife a credit against the marital residence sales proceeds for “the difference between the princip[al] balance of the mortgage as of March 22, 2007 and the amount due at closing . . . .”

As in our example, the wife had made the mortgage payments while the action was pending without any contribution from the husband. The Appellate Division recognized that the wife was entitled to be reimbursed:

Where, as here, a party has paid the other party’s share of what proves to be marital debt, such as the mortgage, taxes, and insurance on the marital residence, reimbursement is required . . . .

Here, however, the Court held that the wife was entitled to a credit equal only to 50% of the reduction in the mortgage principal.  Such, the Court stated, reflected that it was the responsibility of both parties to maintain the marital residence while the divorce action was pending.

When reducing the credit from 100% to 50%, the Second Department cited its 2004 decision in Palumbo v. Palumbo,  In that case, the Court directed that the plaintiff wife’s “share of the proceeds” be reduced by “by one half of the total of the defendant’s payments of principal on the mortgage . . . .”

Using the numbers in our example, Mr. Palumbo would receive his own 50% share of the $300,000 in net proceeds, or $150,000.  In addition, Mr. Palumbo would receive from the wife’s share, another $25,000 (50% of the reduction).  Mr. Palumbo leaves the sale with $175,000 in proceeds; the wife with $125,000.

On the other hand, Ms. Le would only walk out with $162,500.  Ms. Le is first to receive her $25,000 credit (50% of the mortgage reduction) against 100% the net sales.  So, from the $300,000 in net sales proceeds, first give Ms. Le her $25,000.  Then, split the remaining $275,000: $137,500 to each party.  Ms. Le ends up with $162,500; Mr. Le with $137,500.

In order to give Ms. Le the 50% of the mortgage principal reduction with which her husband should be charged. you take 50% of the mortgage reduction from the husband’s share, as was done in Palumbo.  Alternatively, as was done by Justice Christopher in Le, you return to the wife 100% of the mortgage reduction off the top.  What you cannot do, is only give Ms. Le 50% off the top.