Husband’s payments toward mall may provide cash for soon-to-be-ex wife
By: Michael H. Gora
Q We were married for years before the divorce started almost a year ago. We had both been married before. When we got married, my husband and his brother owed a big shopping mall in New Jersey. He always told me that it would be our retirement. He said it was worth millions and getting more valuable.
We never saw any income from the mall. During the marriage, my husband engaged in a career as a successful accountant in several of those big national accounting firms. Some times, they merged, sometimes they went out of business, but he always landed on his feet, was called a partner and made a good living.
As he was the accountant, and I was the homemaker and mother, raising his children and mine, he took care of the books. Neither he nor his brother ever managed the mall; that was done by a professional management company.
My forensic accountant and attorney have now completed the discovery, and accounting. My husband’s interest in the mall was always kept in a corporation in which he and his brother each owned 50 percent of the shares. It was, and is, non-marital property.
At my husband’s deposition, however, he revealed that the mall had not been doing well. He and his brother refinanced the mall with an interest only mortgagee about eight years ago. For the last eight years, the mall had not been able to make the mortgage payments. He had taken about $10,000.00 a month from his earned income, and our savings, without telling me, to make his share of the mortgage payments.
At first my lawyer and accountant thought that it might be a good thing; if the value of the mall had grown there would be a marital component that might be used to pay the marital estate the amount “borrowed”, plus interest. We just got back our appraisal of the mall, and it is worth no more than the mortgage.
We have other savings, plus equity in our house in St. Andrews of over a million dollars. My husband also has a couple of million dollars between his current 401k and his rollover IRAs. Can I do anything to recapture at least half of the payments that my husband made towards the loan? I never knew about?
A. Florida family courts are courts of equity. That is, within the parameters of the equitable distribution statute, 61.075, and the appellate cases interpreting that statute, the judge in your case will have discretion to make certain that fairness prevails.
If the value of the shopping mall had grown over the years, your husband’s share, even though non-marital property, could have been your source of the distribution to make you whole based upon your unknowing contributions of marital money to the non-marital property.
Since the shopping center property decreased in value, there is no marital share in whatever equity there remains in the property based on appreciation. However, the case law supports a position that the amount of equity that was created by the $10,000 monthly mortgage payments that your husband made from mortgage payments made with marital money is a marital asset to be equally divided.
The marital portion of the $10,000 will only be the amount of the payment that actually was applied to the loan balance, and not to the amount of the payment that was applied to interest on the loan.
Michael H. Gora has been certified by the Board of Legal Specialization of the Florida Bar as a specialist in family and matrimonial law and is a partner with Shapiro Blasi Wasserman & Gora P.A. in Boca Raton.