What Happens When Sole and Separate Property is Used to Purchase a Home During Marriage?
The public policy of the state of Arizona is to preserve and protect the community whenever possible. As a very general rule and as only one example of many situations that could arise, the community gains a community lien whenever community funds are used to improve the sole and separate property of the other spouse, but only to the extent, those improvements increased the value of that sole and separate asset.
However, a much different result applies when separate funds are used to improve a home during the marriage. In such a case, the sole and separate funds are presumed by law to be a gift to the community absent an agreement between the spouses that the sole and separate funds are to be repaid. The general rules discussed above have many exceptions, which can be very complicated. You should consult with a qualified and experienced Arizona community property attorney about your particular situation.
You should read our article “Changing Sole and Separate Property Into Community Property,” which discusses the Arizona Court of Appeals decision in the Malecky v. Malecky case addressing these issues or watch the video below regarding the Malecky case. You may also wish to read our summary of the Arizona Court of Appeals case of In Re the Marriage of Flowers wherein the court ruled a trial judge may unequally divide separate property that has been turned into community property if it is proven to be equitable to do so.
Similarly, the Arizona Court of Appeals held in the In Re Marriage of Inboden case that a trial court may not order an unequal division of community property for the sole purpose of reimbursing a spouse for using his or her sole and separate property to acquire or improve community property. The court of appeals did indicate a trial court may consider the respective contributions of their separate property on community property when the judge exercises his or her broad discretion to look at the “big picture” when dividing that community property.
Malecky v. Malecky | Sole and Separate Property Used to Buy Community Property
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