Facts: Before Husband and Wife married, they lived together in a home owned by Husband that was being rented by Wife.

Two months before their marriage, they found another home. Husband purchased it for $445,000 and had it titled in his name. He paid $146,000 down and financed the remainder through a mortgage held only in his name.

During the marriage, this new property appreciated by $30,000.

Wife testified the new property was purchased in anticipation of the marriage. Wife claimed she decorated, repainted, cleaned the carpet, and did other things to make the house ready as a home for the family and their children from prior relationships. Once they moved in, she claims she did most of the upkeep, cleaning, cooking, and laundry.

After less than two years of marriage, Wife obtained an order of protection and filed for divorce.

The trial court found that “neither party distinguished themselves in the field of veracity.” Still, the trial court determined that Husband’s actions before and when he purchased the new home indicated his intention for the house to be a gift to the marital estate. The house was found to be marital property. It was ordered sold, and Wife was to receive $100,000 from the proceeds.

Husband appealed.

On Appeal: The Court of Appeals affirmed the trial court.

Husband argued the home is his premarital, separate property. He notes that Wife’s name is neither on the deed nor on the mortgage. He claims to have paid every single mortgage, insurance, property tax, and utility payment.

As a general rule, assets acquired by either spouse during the marriage are presumed to be marital property.

Similarly, assets acquired by either spouse before the marriage are presumed to be separate property.

Separate property can become marital property via the doctrines of commingling and transmutation.

Commingling occurs if the separate property is inextricably mingled with marital property or with the separate property of the other spouse. If the separate property continues to be segregated or can be traced into its product, then commingling does not happen.

Transmutation occurs when separate property is treated in such a way as to show an intention that it become marital property. This presumption can be rebutted by evidence of circumstances or communications clearly indicating an intent that the property remains separate.

This classification of property as marital or separate is vital because marital property must be equitably divided between the parties. In contrast, separate property is not subject to division by Tennessee courts.

The Court found enough evidence to support the trial court’s conclusions:

The parties shopped as an engaged couple for the house they would move into as husband and wife. It was purchased just two months prior to their wedding in anticipation of their marriage. The real estate . . . was used as the marital residence. It was maintained and managed primarily by Wife. Wife and Husband co-mingled their money in a joint bank account out of which the mortgage payment was made. . . .

The court found the testimony of the realtor . . . to be persuasive. She stated that Husband introduced Wife as his fiancée and that “they” were looking for a house to move into as a family. . . .

Even though the title to the home remained in Husband’s name, his actions in concert with Wife established that more likely than not, the property became marital. Separate property can become marital property even without a change in the title. . . . The status of property depends not on the state of its record title, but on the conduct of the parties. Although Husband may consider Wife’s contributions to be minor, evidence in the record is sufficient to support the trial court’s finding of transmutation of the [marital residence.]

Although the Court affirmed the trial court’s classification of the marital residence as marital property, it adjusted the trial court’s division by classifying Husband’s down payment as his separate property. Thus, when the property is sold, Husband will receive his down payment of $146,000, and the remainder after the mortgage is satisfied will be divided equally.

Hunt-Carden v. Carden (Tennessee Court of Appeals, Eastern Section, May 3, 2020).