Dividing Property Not Included in Divorce Decree in Arizona

One purpose of a divorce proceeding in Arizona is to divide up the marital property between the spouses. However, the superior court cannot split a property if the spouses do not make the court aware of it. So, how do you go about dividing property not included in a divorce decree in Arizona?

Whether the court can later step in to resolve disagreements between the ex-spouses about the disposition of that property depends on several factors.

In the case of Thomas v. Thomas, 205 P.3d 1137 (Ariz. Ct. App. 2009) the Arizona Court of Appeals discussed whether a superior court has authority to order one former spouse to transfer an interest in real property to the other when the couple deliberately omitted the property from the divorce case.

Mr. and Mrs. Thomas divorced in 1998 after 38 years of marriage.

At the time of their divorce, they owned a condominium in California.

They made their agreement about what would happen to the home and deliberately chose not to mention it to the superior court handling the divorce or to include it in the divorce agreement.

Their own accord about the California property went awry seven years after the divorce and James brought the matter to the attention of the divorce court, asking it to order Jonnie to give him half of the equity in the condominium.

The lower court made the order, but the matter was appealed to the Court of Appeals.

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The California Condo Was Not Mentioned in the Divorce Decree

In the Thomas case, the couple made the deliberate decision not to include the California condominium in the divorce.

They opted to keep it in both their names and divide the use of it between them.

After the divorce, Mr. Thomas wanted to take out a loan on another property the couple owned together and asked Mrs. Thomas to transfer her interest in that property over to him to allow him to get the loan.

In exchange, he gave her a signed deed transferring his share in the California condominium to her.

This was to serve as security for her, and she agreed not to record it unless he died or failed to pay off the loan on the other property.

However, Jonnie recorded the deed giving her 100% of the California property.

When she began to treat the condominium as her own, James asked the divorce court for an order that half of the equity in it was his.

Property Omitted from a Divorce Decree Is Held as Tenants in Common

Mrs. Thomas argued that the divorce court did not have the authority to make any orders about the California condominium.

She asserted that the property was no longer marital or community property after the judgment was entered, but, rather, ownership converted tenants-in-common shares held by the couple.

The Court of Appeals agreed. It noted that, under Arizona law, it is the superior court’s job in a divorce to divide all community property held by a couple.

Any community property that is not mentioned in a divorce decree is transformed into property held as tenants in common.

That means that, after the divorce decree was entered, each spouse was the owner of 50% of that property as tenants in common.

The Divorce Court Lacks Authority to Resolve Post-Divorce Tenant-in-Common Issues

A party to a divorce can ask the superior court for relief when marital property is accidentally omitted from a divorce decree; however, that is not the case when both spouses agreed to exclude the property.

In the case of deliberate omission, the property transforms from marital to separate property – with each spouse holding a 50% separate property interest.

The Court of Appeals ruled that the Thomas couple who decided together to omit property from their divorce decree cannot expect the divorce court to resolve later disputes over the property.

Instead, claims like those brought between Mr. and Mrs. Thomas, arising from conduct that happened after the divorce, are based on the parties’ relationship as tenants in common, which is governed by principles of law unrelated to their relationship as former husband and wife.

If you have questions about dividing property not included in divorce decree in Arizona, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona community property and family law attorneys have decades of combined experience successfully representing clients in community property and family law cases.

Our family law firm has earned numerous awards such as US News and World Reports Best Arizona Family Law Firm, US News and World Report Best Divorce Attorneys, “Best of the Valley” by Arizona Foothills readers, and “Best Arizona Divorce Law Firms” by North Scottsdale Magazine.

Call us today at (480)305-8300 or reach out to us through our appointment scheduling form to schedule your personalized consultation and turn your community property or family law case around today.

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