By Elizabeth Kruska
Richard Hardie and Lisa Mangini were married. It’s not 100% clear, but around 2002, Richard got a mortgage from Brattleboro Savings and Loan (“the bank”) to buy a house in Weathersfield. Only he was on the title to the house and also, only he was on the mortgage. They also had a “second home rider” clause in the mortgage, because it wasn’t their primary home. Richard refinanced the house in 2004 and 2005, both times in his own name.
Richard and Lisa split up in 2007, and she moved to the Weathersfield house, in the hopes that that could be her house and ultimately, her permanent home. After living there about 10 months she filed for divorce in Vermont, and asked that the Weathersfield house be granted to her in the property settlement. While the divorce was pending, Richard refinanced the house again, again solely in his name, and continued to call it a second home, rather than either of their homesteads.
By January 2011, the bank filed a foreclosure action against Richard—and only Richard. That makes sense, since Richard was the only name on the title and the note. Lisa answered as an intervening party, because she felt she had a homestead interest in the house, having lived there for about 4 years. The bank said no way—she didn’t have a legal or equitable interest in the home, and Richard’s refinance in 2008 wasn’t a purchase money mortgage. Lisa cross-filed for summary judgment, saying she had an equitable interest in the property as a result of filing for divorce.
The deal with property settlements in a divorce is this: it doesn’t matter whose name a particular piece of property is in, or when they got it. When it comes time to crafting an equitable distribution of property, it’s all available to be reviewed and distributed. Under Lisa’s theory, even though her name wasn’t on the title or the mortgage, she was married to Richard who was the owner, so she owned it, too. Since she’d been living there for 4 years and she asked for the house in the divorce, she argued she should get an equitable title to the land. Good idea.
SCOV did not agree. On the record before the court, it looks like both parties actually wanted that house. The fact Lisa filed for divorce didn’t bestow upon her title, nor did it give her a homestead right. SCOV explains that the point of the homestead right is so families have homes. Generally speaking, someone only has one homestead. If married people split up, they can each have a homestead, but they’ve each got to take affirmative steps to establish each clearly.
SCOV says this is a situation where equitable title isn’t clear. They look at a few other situations they’ve reviewed in the past where it was clear that someone somehow got equitable title, like where someone made an oral contract for land and built a home on it, or where a long-time resident of a farm actually owned the farm but another person held the title for “security.” The situation here wasn’t clear enough to show that Lisa had actually established a homestead right in the Weathersfield home. SCOV has to be pretty convinced there is an equitable title; the less convinced they are, the less likely they are to grant equitable title to someone. Makes sense, since land is finite, and the only thing you can really rely on to show ownership is the title.
So, SCOV reverses Lisa’s granted motion for summary judgment and the denial of the bank’s motion for summary judgment, and remands it back to the trial court.
Justice Burgess concurs. His opinion pretty much says he agrees with the majority and also with the other concurrence. Good thing he’s not paid by the word, because his concurrence is one sentence long.
Judge Bent, specially assigned, writes plenty for them both. He feels there’s another reason for summary judgment to be reversed. He points out that Richard’s 2008 mortgage was simply a refinancing. He got a new loan to get a lower rate. It wasn’t a new debt, it was just a different expression of an existing debt. He also agrees that the pending divorce and interim order wasn’t enough to create equitable title, but writes more on other issues.
Judge Bent talks about homestead rights. It happens that sometimes one spouse is the title holder while the other isn’t. A homestead right doesn’t give the non-title holder title, it makes sure that spouse isn’t alienated from the property. In other words, it gives the spouse the right to be there, and just because he or she isn’t on the deed doesn’t mean the other can kick him or her out. He’s also concerned about situations where a title holder might move out, establish a new homestead, and then subsequently encumber the first home with debt. That’s not to say it’s what’s going on here, but the law is a little uncertain when it comes to situations like this, and maybe more cases will come up.
Judge Bent also points out that when someone establishes a homestead, it’s subject to debts and causes of action at the time of acquiring the homestead. So, when Lisa started living at the Weathersfield house in 2007, it was already subject to the previous mortgage. Judge Bent says she doesn’t get to escape the existing liability on the house just because it was refinanced solely by the husband a while later. And since it’s just a re-statement of pre-existing debt, it’s still there.
The statutes are meant to prevent one spouse from encumbering another spouse with a homestead-related debt without agreement of both spouses. Even though Lisa wasn’t a signatory on any of the mortgages on the Weathersfield home, she also doesn’t get to avoid the existing liability by claiming a homestead right.
So, all the justices (including the specially-assigned Judge Bent) agree that this was not the right result and it goes back to the trial court.