A Carluzzo Rochkind & Smith note: Following is an article by Virginia Lawyers Weekly. We did not handle this case, but it brings up important points your divorce attorney should be familiar with. For more than 20 years our divorce lawyers and equitable distribution attorneys in Manassas have helped clients with such matters in Prince William County, Fairfax County, Woodbridge, and throughout Northern Virginia. If you have any questions or would like to schedule an appointment, please contact us at (703) 361-0776.
Equity in marital home correctly calculated
By Virginia Lawyers Weekly – 12/20/2022
The trial court applied the correct burden of proof to determine the parties’ interests in the marital home’s equity.
It is not wife’s burden to prove marital contributions caused the increased value in the marital home. Rather, husband, as the owning spouse, has the burden of disproving causation once wife, as the non-owning spouse, shows “the contribution of marital property and an increase in value of the separate property.”
Background
Before the parties married, husband bought a house that would become the marital home. The home was titled solely to him. He financed most of the purchase price with a mortgage and paid the balance at closing. He also bought a Toyota 4Runner.
“Husband and wife married in 2014. At the time, the mortgage loan had a remaining balance of $227,197.17. … [H]usband has remained the sole titled owner of the home. …
“In 2015, the parties had a child diagnosed with Down Syndrome, and they agreed wife would stay home and care for the child. After this, husband’s income paid ‘all the bills,’ including mortgage payments.”
The parties separated in October 2020. The trial court “awarded wife a divorce from husband” and “$4,186.25 toward wife’s attorney fees and costs.”
On appeal, husband “challenges the court’s rulings about equitable distribution, spousal support, and attorney fees.”
Home equity
“Husband argues that the circuit court erred by finding that wife was entitled to any increase in equity in the Winchester home ‘caused by market forces’ because she did not present evidence that marital contributions affected those market forces or the increase in value. …
“Although husband concedes that ‘mortgage payments made during the marriage were marital contributions’ – and that the value of the Winchester home increased – he argues the mortgage payments ‘are irrelevant to the market-appreciation issue.’
“Rather, husband contends that ‘[i]n the absence of any marital contribution to the market appreciation, [w]ife has no claim’ to the increased equity in the home. Similarly, husband argues that wife ‘was required’ to provide evidence of the value of the home on the date of their marriage to prove the marital interest in the equity of the home.
“In essence, husband argues that he gets all of the benefit from an increase in value due to ‘market forces’ unless wife can prove that marital contributions caused the appreciation. As the circuit court recognized, however, the Supreme Court of Virginia has rejected this argument.
“‘Code § 20-107(A)(3)(a) does not require the non-owning spouse to prove causation’ – rather, it ‘places the burden of disproving causation on the owning spouse, once the non-owning spouse makes a prima facie showing of … the contribution of marital property and an increase in value of the separate property.’ …
“Given that (1) marital property contributed to payments on the Winchester home and (2) the home’s value increased, husband bore the burden to prove that ‘the increase in value or some portion thereof was not caused by contributions of marital property or personal effort.’ …
“Husband’s general argument that the Winchester home increased in value due to ‘the economy’ failed to meet this burden. As the circuit court found, husband did not offer any proof in support of his conclusion, let alone what amount of equity in the home was attributable to ‘the economy.’
“Accordingly, husband failed to prove his separate interest in the equity of the Winchester home beyond the separate payments he made before the marriage and after the separation.
“If husband contends that evidence of the value of the Winchester home on the date of his marriage to wife would have proven that he had a greater separate interest in the equity of the home, it was husband’s burden to introduce such evidence.”
‘Brandenburg’ calculations
“Alternatively, husband contends that the circuit court erred in its Brandenburg calculations ‘by crediting [h]usband with only his cash paid at closing rather than the full acquisition cost of’ the Winchester home. The Brandenburg formula is ‘one method for ascertaining the value of the separate and marital components of hybrid property in relation to the original contributions.’ …
“Directly opposite to husband’s position, we have explained that ‘[a] strict application of the Brandenburg formula does not take into account the extent to which the parties are obligated on a loan used to purchase the property; it considers only the degree to which payment on that loan reduces the loan principal, thereby resulting in the acquisition of equity.’ … (emphasis added).
“Accordingly, the circuit court did not err by not crediting husband for the full acquisition cost, including the mortgage loan and closing costs, of the Winchester home in its Brandenburg calculations.”
Toyota
“As to the equitable distribution of the Toyota, husband contends that the court erred by finding this vehicle was marital property. We agree.
“At trial, the only admitted evidence about the Toyota was one exhibit from wife that listed the Toyota as marital property, titled in husband’s name, bought before the marriage, and with a fair market value of $9,000.
“Code § 20-107.3(A)(1) applies here as well. Like the Winchester home, the Toyota was purchased before the marriage, making it separate property – something wife concedes.
“But unlike the Winchester home, wife did not meet her burden to prove that any contributions of marital property were made to pay for the Toyota, or that the equity in the Toyota increased during the marriage. …
“Wife argues that, notwithstanding husband’s separate interest, the Toyota was ‘paid off during the marriage,’ as shown by the ‘Certificate of Title dated Nov. 29, 2016.’ But wife never introduced this certificate of title into evidence at trial.
“Thus, nothing in the record shows whether the purchase of the Toyota was secured by a loan, when that loan was paid off, or whether marital contributions were used to pay off the loan.” This portion of the trial court’s rulings is reversed.
Other issues
Because the case is being remanded for redetermination of the equitable distribution “we do not reach husband’s assignments of error about the amount and the duration of the spousal support award.”
The trial court did not abuse “its discretion in awarding wife $4,186.25, a portion of her attorney fees and costs.” Wife’s request for appellate attorney fees is denied.
Affirmed in part and reversed in part.
Spaid v. Spaid, Record No. 0021-22-4, Oct. 25, 2022. CAV (Lorish). From the Circuit Court of the City of Winchester (Iden). Ann M. Callaway for appellant. Peter W. Buchbauer for appellee. VLW 022-7-488, 13 pp.
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