Third Party Property and Equitable Distribution

Dechkovskaia v. Dechkovskaia, 232 N.C. App. 350 (2014)

Equitable Distribution is a mechanism by which former spouses separate their personal and real property. Sometimes the spouses may have some marital (or divisible) interest in a third party’s property. One example is when a couple resides at one spouse’s parent’s residence, and the spouses make some improvement on the land that increases property value. That likely creates an interest in the improvement on the home, which can be attributed to one or both spouses in some manner.

Here is another example in which an interesting third party plays a role.

• Facts: Plaintiff and Defendant’s hearing on equitable distribution was in 2012. The Order that was entered classified certain property as marital, valued it, and then distributed it according to the terms in the Order. However, among the property considered were two homes that were titled to the parties’ minor child. Specifically, the court had found that since acquisition those homes were titled in the child’s name. Also, the child continued to hold title and was the owner on the date of separation. The trial court found that despite the title holder being the child it was marital property. Defendant appealed.

 

• Issue: First, was the trial court in error in classifying the homes as marital property?

 

• Holding:

 

• Rationale: The issue is that since the uncontested findings were that the child held title to these homes since acquisition and through date of separation, the marital interest in the home cannot be determined without the minor child being a party to the case. Moreover, since the child’s interests are adverse to the parents, a guardian ad litem must be appointed to represent the child’s interest. Therefore, without the child as a party, and with no guardian ad litem to represent the child’s interest, the Court cannot divest the child’s ownership in the property. The appeal court reversed the decision and remanded the case back to the trial court, with specific instructions to join the child as a necessary party and appoint a guardian ad litem.

 

 

• Lessons and Observations:

 

1. This is an odd case. Why did the parents decide to title the homes in the minor child’s name? Regardless, it seemed very much a straightforward application of known law: if third party rights are affected by the case, that third party must have the ability to take part in the case and have their notice and opportunity to be heard. I do not know the outcome of how the homes were eventually classified, but it is ironic that the kid could have ultimately kept both for himself.