Property distribution in a Tennessee divorce case is often a contested issue between the parties, particularly when determining whether an asset is separate or marital property. In a September 29, 2017 decision, the Court of Appeals of Tennessee reviewed a lower court’s order distributing the spouses’ property in their divorce case. One of the wife’s arguments on appeal concerned the lower court’s categorization of a duplex as the husband’s separate property.
The spouses had been married for 13 years before their divorce in 2015. The husband was employed as a real estate broker, and the wife was a teacher. Four years prior to the marriage, the husband purchased a duplex rental property, secured by a mortgage. The rental income generated from the duplex was used to pay the mortgage on it. The husband had spent around $33,000 of his income during the marriage to remodel the duplex, and the taxes and insurance were paid from his income. The wife’s name had never been on the deed to the property. In 2004, the husband refinanced to borrow against the property, and the wife signed a deed of trust to relinquish any marital interest she had in the duplex. The property was fully paid off in 2012.
Tennessee is a dual property state because its domestic relations law recognizes both marital property and separate property. When a married couple seeks a divorce, the marital property must be divided equitably between them, without regard to fault on the part of either party. Marital property means any property acquired by either or both spouses during the course of the marriage, and it may include an increase in the value of and income from separate property during the marriage if each party substantially contributed to its preservation and appreciation.