My spouse owned our house before our marriage. We both paid the mortgage. Should I get part of the house?
The family house is arguably the biggest asset that requires division during divorce proceedings. In a Washington divorce, the court usually takes into account what constitutes as a ‘separate property’ of both parties. If your spouse bought the house before the marriage (or after divorce) with his or her own money (or through inheritance), the house will be considered as a separate property of that spouse. The house will remain as a separate property, even after the marriage has commenced. Although, in Washington, the court may award you an ‘equitable lien’ (lien against property that does not require possession of the property to prevent unjust enrichment) taking into account a number of factors. You may qualify for this ‘lien’ if you have made contribution to the home in increasing its value such as, remodeling or getting a new deck installed.
However, in some instances, the court can rule that you are entitled to little or no community interest in the house because of the benefits you garnered from living there during your marriage.
How do I qualify for an ‘Equitable Lien’?
The courts of Washington divide marital assets in a fair and equitable manner. If the ownership of the house belongs to your spouse (meaning that your spouse paid for the house from his or her own resources) before marriage, the court will treat the house as a separate property and will most likely award your spouse with the ownership.
Nevertheless, you are fully welcome to argue that you are entitled to some portion of the house. Here, the courts will evaluate if the increase in the property’s (house’s) value has directly come from your efforts and contribution (active appreciation) and not due to real estate market conditions (passive appreciation).
If the house’s value has been due to ‘active appreciation’, the court will award you with an appropriate compensation, but not necessarily the entire property. Unless the divorcing parties formally and contractually agree, the court will not change ownership of the house.
The court will also consider whether you resources (money) were used to refinance the house. Furthermore, if your ex-spouse puts your name on the title, the home may then be considered marital property and subject to division in a ‘fair and equitable’ manner.
How can Separate Property become Marital Property?
Washington lawyers know that a separate property can become marital property subject to ‘commingling’ and ‘transmutation’.
When a spouse mixes separate property with marital property, commingling has occurred and the asset (in this case, the house) has turned into a marital property. For example, if your spouse was the owner of your marital home and had mortgage against it. Any payment for the mortgage coming from your spouse’s income during your marriage will result in ‘commingling’ of the asset. As anything your spouse earns during marriage is a community property, your spouse has used your resources as well to pay the mortgage, essentially making the house a ‘marital property’. The house would only have classified as ‘separate’ if your spouse had made all the mortgage payments with his or her own personal funds before the marriage took place.
Transmutation occurs when one party owns the marital home before marriage but adds their spouse’s name to the title of the house after marriage, which results in the marital home being considered as community property. This is a complicated process in Washington, so an ‘express declaration’ may be required for a transmutation to take place.
Express declaration is when a spouse expressly acknowledges that he or she is ready to give up his or her rights to a property (house). So, in order for there to be no undue influence, the spouse needs to understand that they are giving up a property right. When a house is ‘transmuted’ during marriage without consideration, the transmutation is considered invalid.
This declaration should not be an oral agreement, rather it should be in a written (contract) form, in a language that both spouses understand.
Transmutation law was coined to ensure that one spouse is not left worse off at the expense of the others. This is a concept known as ‘fiduciary duty’, which obligates that one spouse can not take advantage of the other spouse in property dealings.
Transmutation helps divorcing spouses have a clear identification of property, which property is separate and which are jointly owned. This can help in the smooth flow of the divorce proceedings without misunderstanding, especially in cases where one spouse is wealthier than the other.
These agreements can also serve as legal evidence to identify the rightful owner of a property. For example, a common dispute is the argument of whether a property was a gift to a spouse or not. If the property is addressed in a transmutation agreement, the owner can be identified.
Transmutation also provides with certain tax benefits by letting the owner avoid double taxation when a property is an inheritance.