The bursting bubble - dealing with the marital home during a real estate recession.

• Jurisdiction: United States
• Author: Schwartz, Robert M.
• Date: 01 July 2009

Once upon a time, in the not so distant past, I would receive a phone call from a client who would tell me on a Friday that he or she had listed their marital home for sale. On Monday, I would often receive another call informing me that a contract for the sale of the home had been signed. Those were the days when "sub-prime" meant a steak of questionable quality and a "bailout" was a way of getting a criminal client out of jail.

Times have changed. Matrimonial attorneys are now working in an environment where there is a large inventory of unsold homes and clients who are economically strapped are unable or unwilling to buy out their spouse's interest. Individuals who might otherwise decide to sell their homes are reluctant or incapable of doing so at depressed values, particularly in those cases where the mortgage balance exceeds the home's fair market value. Even if parties decide to sell at today's values, they face the problem of finding a buyer who is able to obtain financing. Accordingly, divorcing couples are frequently reaching the realization that one of them is going to have to remain in the home until it is sold and/or the real estate market improves.

Exclusive Possession of the Marital Home

An award of exclusive possession of the marital home has been most commonly utilized as an incidence of support. For example, a parent is awarded exclusive possession until all of the children have reached the age of majority. However, support is not the only reason for such an award. One of the relevant factors to be considered in equitably dividing the marital estate is "[t]he desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, when it would be equitable to do so...." (1) Duncan v. Duncan, 379 So. 2d 949 (Fla. 1980), held that an award of exclusive possession "should either be directly connected to the obligation of support or be temporarily necessary to prevent reduction in the value of the subject property." Accordingly, if Duncan is read in conjunction with F.S. [section]61.075 (1)(h), then a court has the ability to award exclusive possession of the marital home in order to maximize the amount that the parties will realize upon a sale. Ascherman v. Ascherman, 977 So. 2d 763 (Fla. 2d D.C.A. 2008), exemplifies the flexibility that courts have with respect to an award of exclusive possession. Mr. and Mrs. Ascherman had entered into an agreement with Mrs. Ascherman's grandparents that permitted the grandparents to reside in the marital home for the rest of the grandparents' lives. The court awarded Mrs. Ascherman exclusive possession of the home so that she could honor the parties' agreement. (2)

Rights and Obligations During the Period of Exclusive Possession

In order to understand the rights and obligations of the parties during the period of exclusive possession, the matrimonial attorney needs to know some basic real estate law concepts.

* Real property acquired in the name of husband and wife creates an estate by the entireties. (3)

* F.S. [section]689.15 provides that, upon dissolution of marriage, the tenants in an estate by the entireties become tenants in common.

* Each cotenant in common has the right to access to the property. In the event that one cotenant wrongfully excludes another from access, then the excluded tenant may be entitled to the fair rental value of his or her ownership interest in the property as a result of an ouster.

* If the property generates income, such as rent, then each cotenant is entitled to a proportion of that income.

* Each cotenant has a right of contribution for the costs of owning the property. Co-tenants can be forced to contribute to the payments of carrying costs such as, real estate taxes, mortgage payments, and repairs.

The interplay between family law and real estate law has resulted in confusion. This confusion is reflected in the following cases that have attempted to reconcile these bodies of law.

Barrow v. Barrow, 527 So. 2d 1373 (Fla. 1988)--Mrs. Barrow was awarded a 50 percent interest in the marital home, but the final judgment did not provide for exclusive possession or sale. Subsequent to their divorce, Mrs. Barrow resided outside Florida and Mr. Barrow continued to live in the former marital home. Several years later, Mrs. Barrow commenced an action for partition and Mr. Barrow counterclaimed for half of the amounts that he paid for taxes, insurance, and maintenance. Mrs. Barrow, in return, requested half of the fair rental value during the time that her former husband occupied the home. The Barrow court followed the common law in reaching the conclusion that there was no ouster and that Mrs. Barrow was not entitled to half of the fair rental value. The court emphasized the principle that possession by one cotenant is presumed to be possession of all cotenants. Hence, there can be no ouster until such time as the party in possession communicates to the other party that he or she is holding the property adversely. Although the court held that there was no ouster, the court did hold that when the co-tenant in possession seeks contribution for amounts expended for preservation of the property, then that claim may be offset by the fair rental value of the property during the period of occupancy. (4)

Kelly v. Kelly, 583 So. 2d 667 (Fla. 1991)--Mrs. Kelly was awarded exclusive possession of the marital home by way of a final judgment. The final judgment provided that Mrs. Kelly's right to possession would end when the parties' child attained age 18. A supplemental judgment was entered by the trial court after the child reached age 18. The supplemental judgment ordered that the proceeds of the sale of the house be divided equally. The trial court, in an apparent attempt to follow the Barrow holding, denied Mrs. Kelly credit for half of the mortgage payments and maintenance expenses because the amount of the credit was offset by half of the home's...