Credit for Mortgage Payments Made After Separation

Which spouse will stay in the marital home and who will pay the mortgage during separation are among the many considerations in divorce matters. If the spouse who is not staying in the home pays the mortgage, do they get reimbursed for that money after the divorce? What happens if the marital home is awarded to the spouse who paid the mortgage?

In the case of Kerslake v. Kerslake, this was one of many issues upon appeal. Wife argued that the trial court erred by charging her rent for staying in the marital home after separation and then awarding Husband the residence.

Kerslake v. Kerslake

Wife lived in the marital home after separation, and Husband made all but two of the mortgage payments during that time. Wife made the other two mortgage payments and paid the property taxes for two years. The trial court in this case distributed the marital home to Husband and awarded him credit for the post-separation mortgage payments he made. Wife appealed the trial court’s ruling for a number of reasons, including her assertion that she should not have been charged for living there post-separation since the residence was awarded to Husband.

A spouse is entitled to direct reimbursement or a proportionate increase in their share of marital property or the equitable distribution award if they make payments on a property that is not distributed to them in the divorce. However, if the property is distributed to the spouse who made payments on it, no entitlement to a credit or distributional factor is typically due.

Appellate Court’s Decision

The appellate court determined that the lower court was correct in crediting Husband with a reduced mortgage principal for the payments he made on the mortgage while Wife lived in the home. However, Wife also made mortgage and property tax payments during that time, and the trial court did not give any consideration to her payments. The Court of Appeals ruled that Wife should be given credit for the payments she made if it can be determined she used separate funds to make the payments.

Reversal on Appeal

The appellate court affirmed and reversed, in part, the lower court’s ruling. While issues involving the classification of post-separation loans, foreclosure debt, and Husband’s distributive award were affirmed, the appellate court reversed the trial court’s failure to credit Wife for her payments on the marital home, as well as a few other issues. The case was remanded to the trial court for further consideration.