Thursday, August 25, 2005

Case Law Developments: Refinancing Not Per Se Transmutation of Separate Property

Wiese v. Wiese, 2005 Va. App. LEXIS 322 (Aug. 23, 2005).

The Virginia Court of Appeals joins the courts in Ohio and Idaho in holding that refinancing does not per se transmute separate property. The case presents nice straightforward facts for demonstrating the arguments regarding transmutation and would make an excellent classroom example. 

Text of opinion on the web at http://www.courts.state.va.us/opinions/opncavwp/2251044.pdf

BGF

Husband owned a town home when he married Wife.  He kept the town home in his own name.  Shortly after they married, he sold the town home and the couple purchased a house in their joint names.  The sale of the town home and the purchase of the house were simultaneous transactions. The settlement from the sale of the town home was wired directly to the house settlement as the down payment.  During the 13 years the couple lived in the house, they contributed equally to the mortgage payments and expenses for renovations and repairs and Wife made non-monetary contributions such as painting and wallpapering.  The couple refinanced the house three times, dividing the proceeds from the third refinancing equally between them. At the time of the dissolution proceeding the house was worth $ 465,000.

The trial court found that the entirety of the house was marital property as the refinancing had transmuted Husband's separate interest in the property into marital property. The Virginia Court of Appeals, addressing the issue for the first time, followed those other states that have held that refinancing does not in itself transmute a house into marital property. The court of appeals held that Husband had traced the proceeds of his separate property and that the refinancings, joint titling and joint contributions to the property did not transmute the character of that separate contribution. 

http://lawprofessors.typepad.com/family_law/2005/08/wiese_v_wiese_2.html

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