Wife Likely Has Lien on Home Husband Bought
Question: I purchased a home in Tempe in 2006 with 100 percent mortgage financing. Shortly after that I got married, and both my wife and I worked. All of the monthly mortgage payments on the home since our marriage have been made from our family checking account. My wife has now filed for a divorce. She says that her divorce attorney told her that she has a lien on the home for one-half of the home’s value, even though I am the only one on the deed and I purchased the home when I was single. Is my wife’s divorce attorney correct?
Answer: Probably. The monthly mortgage payments made from the family checking account were made with community funds. Therefore, your wife under community property law has an equitable lien on the home for one-half of the amount of the community funds making the monthly mortgage payments. Inasmuch as the home was purchased with 100 percent mortgage financing, you and your wife probably are now 50-50 owners of the home.
Note: In Arizona, property owned or acquired by either spouse prior to marriage always remains separate property and does not change its character after the marriage except by an agreement by the parties, like a post-marital agreement. A.R.S. Section 25-213. This means that the residence which is separate property does not change to community property for reasons like being used as a family residence or because mortgage payments are made from community funds. Even though the property a spouse had acquired prior to a marriage always remains separate property, that does not mean that the community does not have an interest in the property. To determine the community’s interest in a home, a value-at-dissolution formula is used by courts and the formula determines the amount of the equitable lien the other spouse has on the property after divorce.
Down payments and other mortgage payments made prior to the marriage are calculated against the community and for the separate property of the original purchasing spouse. Since you seemingly paid nothing prior to the marriage, that calculation is zero and the entire home is community property and your interest in all community property is 50%.
The Community’s Equitable Lien Calculation:
- Where “A” = the appreciation of the property during marriage.
- Where “B” = the appraised value of the property as of the date of the marriage.
- Where “C” = the community’s contributions to the principal.
- The value of the community lien = C + (C/B x A).
Barnett v. Jedynak, 219 Ariz. 550 (2009).