During marriage it is not unusual for one spouse to move into a home previously owned by the other. But how is that house factored in as an asset when the couple decides to divorce? Will the spouse who moved in be reimbursed for payments made on the home? What if there is negative equity in the home?
How The Law Works
Under Arizona law, if the house was purchased by you prior to marriage, the house will remain your sole and separate property (unless you added your spouse’s name to the title). But when the community contributes capital to separate property, it acquires an “equitable lien” against the property for which it is entitled to reimbursement. Your spouse is entitled to one-half of the community lien value in a divorce.
Although the community is not entitled to a dollar-for-dollar reimbursement for mortgage payments or improvements made, it will have a lien for a portion of such contributions even if the property has depreciated in value and has no, or negative, equity. Arizona case law also sets forth a specific formula for determining the amount of the community lien, which considers total community contributions, the home’s value at marriage, and depreciation during marriage.
How Hallier Lawrence Can Help
At Hallier & Lawrence we help you focus on what is important and provide you with information to make the best decisions for your future.
Contact us at Hallier Lawrence to learn more about how we can help.