Monday, September 21, 2009

It's Time for Ask Eric. Today's Topic: Utah Code Section 30-2-05: Husband and Wife, Property Rights, Separate Debts

Hello Eric,
As I was looking through the Utah Code the other day for sections relevant to divorce and settlement, I came across a section that one party in a marriage cannot be made responsible for debts incurred during the marriage by the other party (30-2-05: Husband and Wife, Property Rights, Separate Debts). I purchased a house in my name during the marriage. We don't live it in, and only I am named on the title and on the mortgage. If my spouse has no liability for this house, then my spouse cannot also have an interest in it, right?
Rational Reviewer of the Utah Code
Dear Rational:
Right, but also wrong.
You are correct about what § 30-2-5 of the Utah Code provides; however, there is more to this situation than what § 30-2-5 provides alone.
In fact, while § 30-2-5 is good law, it is one of those code sections honored more often in the breach, believe it or not, because other code sections and case law pretty much render § 30-2-5 a nullity. See the following case law below to get a good taste of how and why this is:

Defendant contends his equity in a home he purchased during the marriage should not have been considered a marital asset subject to division. Such an argument is contrary to the specific provisions of Utah Code § 30-3-5, and the rulings of this court in accordance therewith. The marital estate is evaluated according to the existing property interests at the time the marriage is terminated by the decree of the court. (citing Hamilton v. Hamilton, 562 P.2d 235 (Utah 1977); Jesperson v. Jesperson, 610 P.2d 326 (Utah 1980)). Fletcher v. Fletcher, 615 P.2d 1218 (Utah 1980).
"In a divorce action, there is no fixed formula upon which to determine a division of debts. However, such allocation must be based upon adequate factual findings which ruling we will not disturb absent an abuse of discretion." Rehn v. Rehn, 974 P.2d 306.
“Marital property ‘encompasses all of the assets of every nature possessed by the parties, whenever obtained and from whatever source derived,’” Sorensen v. Sorensen, 769 P.2d 820, 824 (Utah Ct. App. 1989) (quoting Gardner v. Gardner, 748 P.2d 1076, 1078 (Utah 1988)), and that the trial court may, in the exercise of its broad discretion, divide the property equitably regardless of its source or time of acquisition. Haumont v. Haumont, 793 P.2d 421, 424 (Utah Ct. App. 1990) (citations omitted). Watson v. Watson, 837 P.2d 1 (Utah Ct. App. 1992).
So, Rational, what this means in practice is that when a judge wants to keep property such as yours separate, he/she refers to § 30-2-5 in issuing the order. When a judge wants to "divide the property equitably regardless of its source or time of acquisition," he/she refers to § 30-3-5 and the case law that interprets it. My experience has been that courts will defer to the policy of § 30-3-5 and the case law that interprets it far, far more often than to the policy of § 30-2-5 and the meager case law that treats it. Practically speaking, unless there are new decisions from the appeals courts to bolster § 30-2-5, the provisions of § 30-2-5 are effectively subsumed in the provisions of § 30-3-5.

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