Articles Posted in Finances

When can rent be charged to a Spouse living in the Marital Home Alone?

Spouses that have been displaced from their marital home during divorce proceedings may find themselves put in the position of paying for a home they have no ability to enjoy.  This commonplace situation has led to a general rule in Pennsylvania Courts that a dispossessed party can claim a credit for the fair rental value of marital property which is jointly held against the spouse in possession at the time of equitable distribution.  See Middleton v. Middleton.  Effectively, they can charge the spouse enjoying the marital home rent for the time that spouse spends in exclusive possession of the property.  However, this general rule is firmly within the discretion of the court to award, and is subject to further restrictions in order to adjust to the specific circumstances of the parties.

Factors affecting Rental Credit Awards:

To the extent  a rental credit may be awarded, it is limited by the amount in which the dispossessed spouse had a personal or financial interest in the property.  In Lee v. Lee, this caveat allowed a Wife who used premarital funds to buy and eventually re-finance the marital home to undermine her Husband’s interest in the home, and therefore whether the amount of rental credit due, if any.

Another central factor in determining the amount of credit is the period of time the spouse was dispossessed and the other spouse was in possession (actual or constructive), of the property.

Additionally, the credit is subject to an allocation for any expenditures made by the possessing spouse in order to maintain the property on behalf of both spouses. This includes repairs or any contributions towards mortgage and tax obligations for the home.

Another crucial factor requires that the party have an actual right to be physically present in the home. Regardless of legal title, if one party has been excluded from the home pursuant to a PFA Order, the court ruled in Lee that they are not entitled to a rental credit for the time the Order has excluded them, regardless of whether or not they were already dispossessed prior to the issuance of the Order.

Again, this is a circumstance-specific analysis, and one party’s superior financial obligations will not necessarily support a rental credit award.  In Schneeman v. Schneeman, the court denied a credit notwithstanding that the dispossessed spouse paid the mortgage, insurance, and taxes.  This is because the possessive spouse received a deviated amount of spousal support during this period, which the court considered an indirect contribution to the expenses.  In Lee, the court viewed the fact that the Wife initially urged the Husband to vacate the premises sooner rather than later weighed in favor of granting the husband a rental credit.

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What about other people living in the house with my spouse?

As a rule, no rental credit will be awarded when a minor child is living in the marital home. The general rental credit rule, however, has interesting effects in practice when the court considers the relevance of other solvent adults- typically the parties’ adult children- living in the marital property.     Judge will look at the specific facts when considering whether a non-resident party is entitled to a credit for allowing the parties’ adult children to live in marital rental property.   The surrounding circumstances of the litigation must support a credit considering the relative economic positions of the parties, and courts may not be inclined to allow the credit absent a showing of need or extenuating circumstances. Continue reading

The old saying goes that marriage is about love and divorce is about money.   No matter how wonderful your marriage is, it is a good idea to be knowledgeable about your assets and debts.  No matter how amicable you think your breakup may be,  don’t underestimate the importance of  protecting yourself and your future financial wellbeing. This is not as crude as it sounds.   The sooner you start seeing yourself as a  competent, strong,  and self-sufficient individual, the healthier you may feel  and, more likely than not, the smoother any divorce process may be.

So here are some quick tips…         

  1. Learn about your finances–   gather as much information as you can about your assets and debts. If you are the one who pays all the bills, does the investing,  and manages the money, this is easy. If you are not that person, then start learning…quickly!  It is not an excuse to say, “I don’t know …She  pays  all the bills.”    Gather  documents. Get photocopies of  3-5 years of the last filed tax returns;  all recent bank, investment, retirement and credit card statements. Keep these documents in a safe place and update them regularly.