Classification of Marital Residence as Separate Property Reversed in Memphis, Tennessee Divorce: Carter v. Browne

FactsHusband and Wife divorced after seven years of marriage.

Tennessee marital propertyThroughout the marriage, they resided in the home owned by Wife’s family. The year after they married, Husband’s name was added to the property’s deed to enable the parties to take out a home equity line of credit (HELOC) that was used to substantially improve the property.

Wife’s father testified that although he added Husband’s name to the deed, he never intended for Husband to retain any ownership interest in the property. He also testified that he, Wife, and Husband signed a written agreement stipulating that Husband’s name was only added to the deed to obtain the HELOC.

Husband disputed that the parties signed a written agreement stating that he has no ownership interest in the property. There was no documentary evidence of this agreement presented at trial.

Husband testified that the property was in a state of disrepair, so the parties used the HELOC funds, and other marital funds, to add an 800-foot cedar fence, several security doors, a new garage door, new windows, a new roof, carpets and area rugs, a deck and inground pool, a mosquito prevention system, a sunroom, and a new HVAC system. The interior was also painted, and the landscaping was redone.

The trial court found that the parties and Wife’s father agreed that Husband was to have no interest in the marital residence. The marital residence was classified as Wife’s separate property.

On AppealThe Court of Appeals reversed the trial court.

Tennessee recognizes both marital property and separate property. When a married couple gets divorced, the marital property must be equitably divided without regard to fault by either party. Separate property is not part of the marital estate and, therefore, is not subject to division. It is necessary for all the assets in which either party has an interest to be classified as marital or separate so a proper division can occur.

Marital property includes all property acquired by either or both spouses during the marriage.

Separate property includes all property owned by a spouse before the marriage.

Separate property can be treated in such a way as to show an intention that it become marital property. Tennessee courts have repeatedly held that joint ownership of a marital residence creates a presumption that the property is marital rather than separate, even where the property was one spouse’s separate property before the marriage. This presumption can be overcome by showing circumstances or communications clearly indicating an intent that the property remains separate.

In determining whether a home owned separately by one spouse has become marital property, Tennessee courts consider:

  • using the property as a marital residence,
  • the ongoing maintenance and management of the property by both parties,
  • placing the title to the property in joint ownership, and
  • using the credit of the nonowner spouse to improve the property.

The Court found the proof overwhelmingly supported the conclusion that the marital residence should be classified as marital property:

First, the parties utilized [the property] as their marital residence throughout the entirety of their marriage. . . . Second, and perhaps most important in this case, Husband and Wife together made significant improvements to the [] property, to the extent that the parties eventually incurred over $200,000 worth of debt in the process. . . . Moreover, it is undisputed that the mortgage payments on the home were frequently paid by Husband or with marital funds, and Wife testified at trial that the debt on the [] property remains in Husband’s name. As such, this factor weighs heavily in favor of Husband.

Third, there is no dispute that the [] property is jointly titled in the parties’ names. However, in light of the testimony that Husband’s name was only added as a joint owner for purposes of obtaining a HELOC, this factor holds little weight in this particular case. Finally, with regard to the fourth factor, it is reasonable to infer under the circumstances that the parties used Husband’s credit to improve the property. Indeed, it is undisputed that the parties took out a HELOC in Husband’s name in order to do substantial renovations on the [] property. While [Wife’s father] insists that Husband was never intended to be a joint owner of the property, [Wife’s father] nonetheless placed Husband’s name on the deed in order for Husband to obtain the HELOC. Again, Wife testified that the debt remains in Husband’s name. As such, the fourth factor favors Husband.

Under all of the circumstances, we must conclude that the evidence preponderates against the trial court’s finding that the [] property remain the Wife’s separate property. Despite Wife’s contentions to the contrary, the actions of the parties throughout their marriage, considered together, is evidence of an intention that [the property] become marital property. This property therefore should have been considered part of the parties’ marital estate for the purpose of the trial court’s equitable division of property.

The case was remanded to the trial court to reconsider its division of the marital property, given this reclassification of the marital residence as part of the marital estate.

K.O.’s Comment: (1) Nine years ago today, I wrote my first post on this blog. 1,231 posts later, here we are.

(2) Wife appealed the trial court’s refusal to award alimony in futuro. One issue in that analysis is the duration of the marriage. Although Husband filed for divorce after seven years of marriage, the parties were not divorced until over two years later. Husband argued it was a seven-year marriage, using the date of their separation as the end date. Wife argued it was a nine-year marriage, using the date of divorce as the end date.

Here, the Western Section says we determine “the length of the marriage by considering the date of marriage and the date of the entry of the final decree of divorce.”

Is that so?

In Rogers v. Rogers and Whitley v. Whitley, the Eastern Section of the Court of Appeals says the duration of a marriage is measured by the time the parties were “together in marriage” beginning on the date of the marriage and ending on the date of separation.

Until all of us get appointed to the Court of Appeals, there’s only one way we can squash this beef between the Western and Eastern sections: ONLINE POLL!

Tennessee Court of Appeals

Carter v. Browne (Tennessee Court of Appeals, Western Section, February 4, 2019).

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K.O. Herston is a family-law attorney in Knoxville, Tennessee whose practice is devoted exclusively to family law, including divorce, child custody, child support, alimony, prenuptial agreements, and other aspects of family law.

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