The Supreme Court's gay marriage decision in Obergefell has been hailed in almost all corners as a milestone in American jurisprudence. From topics as varied as adoption and taxes, a myriad of rights have now descended upon gay couples as a result of the Court's ruling. In this Commentary, we explore the little discussed downsides of the decision when it comes to the property rights and debts of the spouses. This is particularly important when considering the rights of third parties and their settled expectations in the context of retroactivity, as well the ways in which the Court's decision may have the undesirable affect of undoing the carefully laid plans of the spouses. We conclude that courts and legislatures have by no means seen the end of the gay marriage debate. Rather, a host of unforeseen collateral issues lies on the horizon.
The United States Supreme Court's decision in Obergefell v. Hodges has received much acclaim. (1) It has brought a sense of dignity and pride to gay couples and their families, and a feeling of justice and equality to the hearts of many Americans. Not only can gay couples now marry, but they also enjoy a host of civil benefits flowing from this age-old institution. Same-sex spouses now have the same rights as heterosexual couples with regard to estate and income taxation, employment-related spousal benefits, and rights of survivorship. Gay spouses should also now be able to adopt children and enjoy the various rights and benefits that are appurtenant to parenthood. The Court's decision, and these consequences, have been widely celebrated from almost all comers, and in the days following the decision, a simple flip through any newspaper or a quick scroll through one's Facebook or Twitter feed revealed a host of celebratory messages, supportive editorials, and rainbow-colored profile pictures.
Still, not all aspects of the decision have been viewed as positive. Critics noted the decision's possible impact on religious freedom, the role of the states versus the federal government in the formulation of family law, and the extent to which many religious-based educational institutions will retain their preferential tax treatment. (2) One impacted area that has received little attention, however, is the law of property. Although perhaps less obvious, the Court's decision will have significant effects with regard not only to the traditional property of gay spouses--such as real estate, household items, and personal effects--but also to property rights in each spouse's earnings and debts. Moreover, the decision leaves open the possibility that the rights of third parties such as buyers, mortgagees, and transferees of the property of either spouse might unwittingly suffer a significant loss due to the operation of community and other matrimonial property rules. Lastly, gay spouses themselves might be surprised to find that the legal sanctioning of their unions has inured, in large part, to the benefit of their creditors.
This Commentary ruminates on the little-considered problem of property rights arising in connection with gay marriage. While certainly a milestone in the story of civil rights in America, the Court's decision has the potential to cause a host of unexpected, and sometimes negative, consequences for the property rights of gay spouses--problems that legislatures and courts may soon find themselves forced to confront.
RETROACTIVITY AND VESTED RIGHTS
Perhaps one of the most significant questions in the wake of Obergefell is the impact of the apparent retroactivity of the Court's decision. As in many other instances in which the high court has struck down a law as violative of a protected right, if a right exists under the Constitution, then it has always existed. (3) If a law is unconstitutional, it has always been unconstitutional, and retroactive application is appropriate. (4)
The issue of retroactivity of constitutional law decisions--that is, whether the effects of a pronouncement by the court should be applied to facts arising before the decision--has had quite a stormy history in Supreme Court jurisprudence. (5) Justice Scalia, (6) for example, has advocated for a strict retroactivity approach to constitutional decisions, but other Justices, from Justice O'Connor (7) to Justice Frankfurter, (8) have advanced the view that common sense considerations demand a more flexible approach that might often lead to selective prospectivity. Nevertheless, recent case law has indicated a trend toward more retroactivity, even in the face of efforts by Congress to change such results. (9)
Under strict retroactivity theory, then, gay couples validly married under the laws of one state, but domiciled in a non-recognition state, have been living under a marital property regime from the date of their marriage. This means that many of the acts these individuals may have taken with respect to property must now satisfy a multitude of legal rules that were most assuredly not anticipated by the parties at the time of the transaction. For instance, in community property states, the law generally requires that both spouses consent for community real property to be sold, mortgaged, or otherwise transferred. (10) However, if the marriage of a seller of real property was not recognized at the time of the transfer, it is a virtual certainty that this dual consent was not obtained. The retroactive application of Obergefell seriously calls into question the validity of such transactions.
Judging from decisions by the federal government (11) and various states (12) in allowing gay couples to recapture benefits lost prior to marital recognition, retroactivity certainly seems to be the rule for gay marriage. To that end, a number of issues arise in this context. How will the rights of third parties be affected by the marital property implications of the Court's ruling? Moreover, will legislatures craft transition laws that allow gay spouses to avoid certain marital property institutions, as heterosexual spouses are allowed to do by contract prior to or at the onset of their marriages? Or will legislatures pass laws designed to protect the rights of innocent third parties and their settled expectations? And will states be limited in their ability to take any such actions given the risk of deprivation of a spouse's constitutionally...