Marital Debts

Rhode Island Divorce Attorney Pearsall - How are Mortgages treated in a Rhode Island Divorce?

Mortgages are one of the common debts that are encountered by the court in a Rhode Island Divorce proceeding. Typically the mortgage is on the marital home that the parties live in. In less frequent cases the mortgage may be on a second home, rental income property or even a summer home or beach house.

It is a common misconception in a Rhode Island Divorce that the mortgage debt belongs solely to the spouse or spouses whose names appear on the mortgage itself. Mention this, because typically the mortgage lender will make it very clear at the time the mortgage is given as to who is responsible for payment of the mortgage.

So why the difference, right?

Though this tends to be an oversimplification, the difference is that the legal mortgage given by the bank or other lender in exchange for a loan or finance monies is a legal and binding contract between the parties that sign the contract. However, when the Rhode Island Family Court justice looks at the mortgage, even though he or she may consider whose name is on the mortgage, the judge is more concerned with the character of the debt. For instance, was the mortgage used to further the marriage or the marital assets. The judge may question what monies, if any, came out of the mortgage, who controlled them, who used them and what were they used for. The Rhode Island Family court judge in apportioning and assigning debt is not bound by the contract that was signed between the lendor and the mortgagor. The question is one as to whether the mortgage is a Marital Debt. Then, depending upon how it was used, who used it, who primarily paid it and who might currently be capable of paying it, who should be held responsible for that marital debt as between the spouses, or who should be responsible for what portion of that mortgage.

This example might help illustrate the difference, and the confusion that can result if your Rhode Island Divorce attorney does not take the time to explain the obligations to you properly.

Tim and Rose are married and own a home in Cranston, Rhode Island. The deed to the house and the mortgage are in both of their names. Tim is a construction company supervisor and the primary wage earner in the family and his income accounts for about 90% of the mortgage payment each month. Rose works full-time with children afflicted with Downs Syndrome which is very rewarding but does not pay nearly as well and her income covers the remaining 10% of their house mortgage.

In early 2006 Tim gets a large pay raise and a profit sharing bonus check. The check is so large that he runs out and buys a beach house in Narragansett, Rhode Island that is just in his name. When he comes home to talk to Rose he is a bit nervous. Yet Rose is fine with it. Tim has worked hard over the years and he's never asked for much for himself so Rose figures Tim is entitled to this.

In the summer of 2006 Tim brings Rose down to the Narragansett beach house and treats her like a queen almost every weekend. Rose adds a homey touch to the place with decorations and some splattered paint designs and pictures and Tim likes the place even more.

In 2007 cutbacks cause Tim to be demoted and he has to take a pay cut as the bosses son takes over his position. Tim is very depressed and his work is slumping off. Rose tries to talk to Tim and help him see the bright side of things. Tim continues to get depressed and starts buying things for himself, thinking this will make him feel better. Rose starts seeing the checkbook balance drop drastically and she mentions it to Tim that he can't keep spending on all these little things and that they aren't going to make him feel better.

In the late spring of 2007, Tim enters the driveway of their Cranston Home driving a new 2007 Harley Davidson Motorcycle. Tim is all excited. Rose is petrified but keeps calm. Tim has her come out and look at the motorcycle and he points out all the extras that he had put on before he drove it home. Rose asks him how he paid for it. Tim tells her not to worry that he took out a mortgage on the Narragansett Beach House and financed the whole thing. Rose is upset and walks inside. Tim pursues her because he wants to know what's wrong. Rose explains that she doesn't think it's right that he made such a large purchase without discussing it with her first and that she wouldn't have agreed that a mortgage should be taken on the Narragansett Beach House which had been paid off.

Tim tells Rose that he doesn't care. It's HIS beach house and he took the mortgage out in HIS name to buy HIS new motorcycle so she has nothing to say about it. Rose leaves the room crying.

Over the next several month Tim continues doing whatever he wants and begins using the funds in their joint account which is used for bills. Finally Rose cannot take Tim's financial infidelity anymore and she files for divorce.

Rose requests relief from the Rhode Island Divorce Court by asking for, among other things, half (1/2) the equity in the Cranston house after it is sold, half (1/2) the personal belongings, half (1/2) the equity in the Narragansett beach house and half (1/2) the value of the motorcycle and accessories after they are sold.

Tim files a counterclaim for divorce asking that he be awarded 90% of the equity in the Cranston home, the Narragansett Beach House, the Harley Davidson Motorcycle and 50% of their mortgage debt.

What questions will arise when the Rhode Island Family Court Judge scrutinizes these requests?

Does Rose have any claim to the Harley Davidson Motorcycle?

Does Tim have a valid claim that Rose should pay half of the debt when he made 90% of the income?

Does Rose have any right at all to make a claim to the Narragansett Beach house?

If the Narragansett Beach mortgage is only in Tim's name, does the Rhode Island Divorce Court have the power to add Rose to the mortgage if the Judge determines Rose has to pay a portion of that mortgage?

Is Tim stuck with the Narragansett Beach house mortgage but only half it's equity no matter what happens?

Since Tim took out the mortgage on the Narragansett Beach house to buy his motorcycle without Rose's knowledge, can that particular mortgage be considered a marital debt at all?

Authored by:

Christopher A. Pearsall, Esquire
PEARSALL LAW ASSOCIATES
571 Pontiac Avenue
Cranston, RI  02910
Phone:  (401) 354-2369

Attorney Pearsall's practice is focused almost exclusively in the areas of Divorce and Family law.

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