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Who keeps the house and who pays for it?

Once you file for divorce, who stays in the house, and who is responsible for paying the mortgage?

In a recent Arizona divorce case, a wife claimed reimbursement for half of the payments she made towards the community mortgage using her separate property after her husband moved out prior to filing for divorce. The wife argued that she should be reimbursed for the payments she made because they were made using her separate property, but the husband argued that she should not be reimbursed because she had the benefit of living in the marital home. The Superior Court agreed with the husband and did not offer reimbursement to the wife, but the case was appealed and the Court of Appeals made an important ruling that will affect many divorces going forward.

Payment of Community Debt Obligation with Post-Separation Funds

The Court of Appeals ruled that when a spouse pays a community debt obligation with post-separation funds, it must be accounted for in the equitable distribution of property and debt. This means that when a spouse uses separate property during a marriage to pay for something, it is not considered a gift, but it is not presumed that the spouse meant to pay for the other spouse’s portion after the divorce. Therefore, the spouse who paid with separate property is entitled to reimbursement.

Exclusive Use of Community Property Does Not Prevent Reimbursement Claims

 The Court of Appeals also ruled that one party living in the house exclusively with exclusive use does not prevent them from making a reimbursement claim, and ouster is a defense to a reimbursement claim. This means that if a spouse kicks the other spouse out of their house and deprives them of their ability to continue living in the marital home, they can use that as a defense to why they should not have to reimburse the other spouse for mortgage payments. Each spouse generally has the right to continue using community property after the divorce, including cars, houses, and other community property.

Defense to Reimbursement Claims

 The final interesting part of this case is that if the court determines that one party has been ousted or deprived of their ability to use their community property, then the offset they have against the reimbursement claim is equal to one half of the fair market rental value of that home. This means that if both parties are entitled to reimbursement and one party has been ousted or deprived of their ability to use the marital home, then the fair market rental value prevails.

Offset For Fair Market Rental of the Home

This ruling is important for anyone going through a divorce in Arizona because it clarifies the rights of each spouse when it comes to reimbursement for payments made towards community debt obligations using separate property. It also provides guidance on when ouster is a defense to a reimbursement claim and how to calculate the fair market rental value when determining an offset against a reimbursement claim.

If you are going through a divorce in Arizona and have made payments towards a community debt obligation using separate property, you may be entitled to reimbursement. However, if you have ousted or deprived your spouse of their ability to use their community property, that may be used as a defense to a reimbursement claim. It is important to consult with a qualified attorney to understand your rights and obligations in a divorce case.


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