Maryland Couple’s Dispute Over Transfer of House

1387294_rural_yellow_villaA fraudulent conveyance is controlled by Maryland’s Uniform Fraudulent Conveyance Act (MUFCA), a statute which states that an action is fraudulent as to creditors if it is made by a person who is insolvent or who will be rendered insolvent by the transfer. When a couple is going through a divorce, they should not transfer any properties until the court has had a chance to determine the ownership status of the properties. In a recent case, the Maryland appellate court looked at the issue of fraudulent conveyance in the context of a divorce.

A couple married in 1998 and moved into a home owned by the wife’s father. The wife’s father had owned the home since the 1970s and the couple lived there rent-free. When the wife’s father retired he agreed with the couple to let them purchase the house from him. They assumed the remaining mortgage and agreed to pay him $30,000 on the first of three possible events (the house’s sale, sixty days after his death, or a date in 2015).

The transfer of the house was made only in the wife’s name and, in exchange for the foregoing, her father could live in the house rent-free or have the couple provide him with other rent-free housing. The couple started to have problems and the wife told the husband she wanted a divorce.

Accordingly, the husband told the wife’s father he needed a new place to live. The wife wanted to make sure her father could live there and so transferred title of the house to the Trust. Her father was the beneficiary of the Trust. When he died the property would revert to the wife.

The husband filed for divorce and agreed to split property evenly, except for the wife’s father’s home. The wife argued the home was a gift from her father to her and was not marital property. The husband argued the house was marital property and that the previously described agreement showed it was a sale, not a gift from the wife’s father to the wife.

The court declined to rule on the issue of whether the house was marital property. The husband appealed. The appellate court asked the circuit court to have further hearings. The circuit court then determined the house was a gift, not marital property. However, it awarded the husband $8500, the amount equal to his portion of the note.

The husband appealed once more, arguing again that the house was marital property and that by transferring the home to the Trust, the wife had dissipated the value of the home to keep him from receiving a fair monetary award. He argued he should have a monetary award of 50/50, as he had received for all other marital property. The appellate court reversed the circuit court, holding the home was marital property and the contract was a sales contract. It also found that the wife’s transfer of the property to a trust amounted to dissipation of the property and sent the case back to the circuit court.

The circuit court then granted the husband a monetary award of $30,000 but no attorneys’ fees. The husband again appealed. The appellate court upheld the lower court’s decision. Meanwhile, however, the husband filed a complaint against the wife and the trustee trying to nullify her conveyance of the house to the trust. He argued that she had transferred the house with the intent to defraud and prevent him from enforcing his monetary award as a judgment lien against the property during a time when she was insolvent.

He filed a summary judgment, which she opposed. In her view, there was a factual dispute about whether she was insolvent at the time of the transfer. The circuit court reasoned that there was nothing given in consideration for the transfer and ruled for the husband. The wife appealed. The wife and trustee argued that there was fair consideration because they had agreed to give the father a place to live.

The appellate court explained that the issue was covered by Maryland’s Uniform Fraudulent Conveyance Act (MUFCA). The wife had argued there was a dispute about whether she was insolvent. However, she did not identify with particularity a genuine dispute about her insolvency. She had claimed she made the transfer to make sure her father had a place to live, but the appropriate thing to do if the husband had violated that contractual obligation would be for the father to sue for the fair value of his rental accommodations.

In this case, the appellate court found there couldn’t be a dispute that the wife intended to prevent the husband from getting his share of the property. Therefore, it affirmed the circuit court’s granting of summary judgment in favor of the husband.

If you are dealing with difficult Maryland family law matters like the one described above, your family’s well-being depends upon hiring a qualified and knowledgeable attorney who can navigate the rules for you. Contact lawyer Anthony Fatemi and his legal team for a legal consultation.

More Blogs:

Maryland Court Rules Parent Cannot Bargain Away Child Support Without Court Approval, Maryland Divorce Lawyer Blog, May 16, 2013

Maryland Court Decides Railroad Retirement Benefit Case, Maryland Divorce Lawyer Blog, May 11, 2013

 

 

Contact Information