Opinion
Index No.: E2020009661
12-10-2021
D.R.D., Plaintiff v. J.D.D., Defendant
Aaron M. Gavenda, Esq., Attorney for the Plaintiff, Rochester, New York John D. Wieser, Esq., Attorney for the Defendant, Rochester, New York
Aaron M. Gavenda, Esq., Attorney for the Plaintiff, Rochester, New York
John D. Wieser, Esq., Attorney for the Defendant, Rochester, New York
Richard A. Dollinger, J. Sometimes, a higher court ruling ages gracefully — think Palsgraff v. Long Island Railroad Co. — but other times, the ruling frays at the edges, the legislature seemingly alters its contours in later legislation and as younger judges might say, it loses its "pop."
248 N.Y. 339, 162 N.E. 99 (1928).
Should that be the fate of Kahn v. Kahn , 43 N.Y.2d 203, 401 N.Y.S.2d 47, 371 N.E.2d 809 (1977), a decision that the advent of equitable distribution in 1980 and no-fault divorce in 2010 might have consigned to the dog-eared pages in the now yellowing official casebooks weighing down dusty law library shelves?
For now, the rule that judges may not order the sale of real property owned by the couple as tenants-by-the-entirety pendente lite stands but the sands of time may be shifting, as other courts have suggested and as the facts of the matter before this Court demonstrate, equity should, on occasion, be permitted to intervene even while the divorce is pending.
In this instance, a husband and wife own the marital residence, as tenants by the entirety. The husband commenced the action nearly a year ago shortly after he left the marital residence. The wife remained in the house, along with the couple's two children and another child from an unrelated marriage. The husband was ordered by the Court to pay the usual household expenses as a form of "shelter allowance," instead of either child support or maintenance. But, the marital residence was, by accounts of both counsel for the couple, to be sold at the end of the divorce. The marital residence is encumbered by a significant mortgage, which now stands at about $87,000, according to both parties. But, the residence needs repairs and many of those repairs were itemized by the parties during the pending divorce. This Court, during pre-trial conferences, advised the parties that the repairs should be made in an effort to increase the equity in the home. The husband was slated to perform the repairs but, based on the account from his counsel, the wife refused on several occasions to let him enter the residence to make the needed repairs. A stalemate ensued.
The wife was extremely concerned about the need for housing for the couple's children and her son. The parties agreed to retain a realtor for the sale and the wife, in discussions with the realtor, required that the purchase and sale contract include a provision that the actual transfer of the residence would not occur until she found suitable housing. The mother was rightly concerned that the property might not generate any equity for distribution but she was hoping that her share of the net proceeds would give her the necessary funds to relocate. According to the affidavits before this Court, the realtor, when he obtained the wife's signature on a listing agreement included language that she would not be required to surrender possession until after she had located and established separate housing. When the listing agreement was reviewed by the husband, he objected to any delay in surrendering possession of the property and signed the agreement without the wife's requested provision. The stalemate persisted.
The stalemate arrived at this Court when a new buyer offered an all-cash $92,000 offer for the property with a demand for a closing in 60 days. The wife refused to sign the purchase offer, even though recommended by the realtor and approved by the husband. She continued to contend that she needed an ability to relocate and confirm new housing before she surrendered the property and she added that keeping the children — the couple's two daughters and her son — in the house would allow them to complete the school year in their current schools.
In response, the husband moved to require her to sign the agreement, arguing that the financial facts of continued ownership of the property merited a court order to require the sale. The husband claimed — without dispute — that the outstanding balance of the mortgage — nearly $87,000 — and a revised realtor's commission at only 4.5 per cent would erase any equity and neither parent would be paid any proceeds at the time of the sale. There is no evidence that even if the repairs, which were continually discussed by the parties during pre-trial conference, were made that the equity would be substantially enhanced and allow either parent to recover any net proceeds. The Court had made it clear that if the husband invested separate property funds in the repairs, he would be reimbursed those funds dollar-for-dollar at the time of sale. A microeconomic review of the consequences of this stalemate drives a conclusion that equity — the governing principle embedded in the legislature's concept of equitable distribution — should weigh in favor of requiring an immediate — or at least prompt — sale of the residence during the pendency of the divorce. First, because the father is paying the "housing expenses," he is not paying either child support or maintenance. This form of shelter allowance covers the cost of the mother and her two children in common with the father continuing to live in the marital residence. But, the mother also has a third child who lives in the home and, in reality, the father is accommodating an unrelated child by financing the housing cost for all three of the mother's children. Second, the mother, living a lifestyle without any change, has little incentive to resolve the divorce or make any of the critical compromises required to achieve an equitable agreement. For her, little has changed since commencement of the divorce: she continues to live in the house and have all the significant living expenses — the mortgage and property taxes — paid. As evidence of her nonchalance during the divorce, the mother has required that any sale of the residence be conditioned on her securing adequate housing. In short, despite the fact that both parents knew that the house — the primary marital asset — would have to be sold as part of the divorce resolution, the wife here has not taken any reasonable steps in the year since the action was commenced to obtain housing, preferably in the same school district to create continuity for her children.
Third, while the Court can countenance the father paying the shelter allowance as an offset against child support and maintenance obligations, the mother is actually using the husband's equity in the residence as a form of interest-free loan to his spouse. Under equitable distribution, the net equity in the property is part of the marital estate and, in this Court's experience, that equity is usually evenly divided between the spouses or traded as an offset against other assets. If as a practical matter, the net equity in a marital residence is $100,000, then at the time of commencement, each party would be entitled to half of that amount. But, if the divorce is delayed a year, the non-occupant spouse loses the benefit of their half of the equity for a year. Even if the loss benefit of money is only three or four percent, the non-occupant spouse has lost $1500-$2000 that they would otherwise have in their pocket if the house were sold on the date of commencement. This Court acknowledges that in many cases, when the non-occupant spouse is paying the mortgage and other housing costs during the pendency, a court, at the conclusion, can ameliorate some of the consequences of that financing by permitting the contributing spouse to get credit for the principal reduction of the mortgage and furthermore, obtain the income tax advantages of the housing payments.
Another equitable consideration in the sale of a marital residence, pendente lite, is a possible separate property claim by the non-occupying spouse. In that instance, the separate property value is being used by the occupant spouse without any payment to the holder of the separate property claim. In short, the occupant spouse gets an interest free-loan from the occupant spouse not only for the value of the residential marital equity but the separate property claim as well. While a separate property claim in the marital residence is not asserted here, nonetheless it could be an equitable factor in future applications to sell a marital residence during the pendency of the divorce.
In this instance, the usual justification for a pre-judgment sale is actually amplified because the marital residence is encumbered by a significant mortgage that will, at sale, snuff out any net equity for distribution. The current mortgage balance is nearly $87,000. The all-cash offer, presented to the Court on the motion, totals $92,000. The father negotiated a reduced realtor's commission which total 4.5 per cent or $4,140. If this deal becomes final, the sale of the residence will be a barely break even proposition. The husband, who has financed the home and would be entitled to a credit for pay down of the principal during the pendency, will get no credit at all from the equity because, in this circumstance, there is no equity to equitably distribute. Instead, the father has been making mortgage payments to keep mortgage current without any ultimate financial benefit to himself or the wife.
Another equitable factor — also not present here — exists if only one spouse is on the title and mortgage on the marital residence. In that case, the risk of the debt to be paid to a third-party rests solely with the titled spouse who is the sole obligor on the mortgage. Even if the mortgage liability is eventually distributed between the spouses, a matrimonial court would need to consider that factor prior to any order to sale of the property pendente lite.
A final equitable factor is that if a sale occurs pendente lite, the proceeds or the liabilities remain subject to equitable distribution. What changes, upon sale, is simply the form of marital asset: the property is converted into cash, which remains subject to equitable distribution and each spouse has all their claims for separate property or otherwise to the now fungible cash proceeds
Based on all these factors, a court, dividing marital assets in an equitable distribution landscape, should have the authority to consider all these factors in deciding whether to order a pendente lite sale of the marital residence. The roadblock to that equitable relief is the Court of Appeals determination in Kahn v. Kahn , 43 N.Y.2d 203, 401 N.Y.S.2d 47, 371 N.E.2d 809 (1977). In that case, the defendant lived in a nine-room house in Scarsdale, New York. There was no demonstration that the defendant needed to live in the house and there are no signs of an imminent reconciliation of the parties. The Appellate Division Second Department decision in Kahn v. Kahn , held that the matrimonial judge could order an interim sale of the marital residence, citing Ripp v. Ripp , 38 A.D.2d 65, 327 N.Y.S.2d 465 (2d Dept. 1971), aff'd 32 N.Y.2d 755, 344 N.Y.S.2d 950, 298 N.E.2d 114 (1973). In Ripp v. Ripp , a spouse was awarded exclusive possession of the residence and the non-occupant brought a post-divorce action for partition. In determining that a matrimonial court should resolve the issue of the sale, the Appellate Division in Ripp v. Ripp , while noting that a divorce had already been granted and that the couple were now tenants-in-common, nonetheless highlighted the equitable factors that are involved in any sale of a marriage's major asset:
55 A.D.2d 638, 390 N.Y.S.2d 160 (2d Dept. 1976)
in the present action for partition the court would have to consider the provision in the divorce decree granting sole possession of the premises to the defendant and the effect of partition on the circumstances of the parties. In that appraisal the court would be confronted with the fact that the defendant's loss of possession would be coupled in all probability with the need for increased support as a result of conditions in the rental market. The adjustment of these equities, on the other hand, could better be managed by the court in the Matrimonial Part, which so recently had been concerned with these very circumstances in molding the judgment of divorce.
In addition, we think that the Matrimonial Part, dealing solely with problems arising out of marital
relations, should decide when and under what terms the marital home should be sold. The Matrimonial Part, in making that decision, should give weight to the relative financial resources of the parties, the need of either party for occupancy of the home, and the duration of the exclusive possession. For example, the court's decision might well be affected, among other things, by the cost of maintaining the home in comparison to the benefits received, the financial hardship suffered by either party by the refusal to authorize
a sale of the property, the presence or absence of children to enjoy the use of the home, or the size and expansiveness of the home in relation to the expected use. The Matrimonial Part in its discretion could determine, once a sale was found to be warranted, the manner of sale, or, if it were so disposed, could permit the institution of a partition action, so that the supervision of the sale would be undertaken by that part of the court charged with the course of such proceedings.
Ripp v. Ripp , 38 A.D.2d at 69-70, 327 N.Y.S.2d 465. The Court of Appeals affirmed Ripp based on the Appellate Division opinion. While Ripp can be easily distinguished because the couple were tenants-in-common rather than tenants-by-the-entirety, the decision in Ripp , endorsed by the Appellate Division holding in Kahn v. Kahn , highlights that matrimonial judges are best postured to balance the various equities when couples — after a divorce is granted — litigate the sale of the marital residence.
The Court of Appeals in Kahn v. Kahn reviewed the statutory signpost of resolving issues of marital real property and relied on Section 234 of the Domestic Relations Law which, according to the Court:
Although section 234 empowers a court to make a direction concerning possession of property, "as in the court's discretion justice requires having regard to the circumstances of the case and of the respective parties", the legislative history makes clear that the court may exercise its discretion only with regard to questions of possession. "[The] determination of title questions [is] to be controlled by principles of property law.
Kahn v. Kahn , 43 N.Y.2d at 209, 401 N.Y.S.2d 47, 371 N.E.2d 809. The Court added:
Since section 234 was intended only as a procedural
device to permit a court in a marital action to determine questions of possession and title arising within that action, and was not intended to alter existing substantive property law principles, we hold that unless a court alters the legal relationship of husband and wife by granting a divorce, an annulment, a separation or by declaring a void marriage a nullity, it has no authority to order the sale of a marital home owned by the parties as tenants by the entirety.
Id. at 210, 401 N.Y.S.2d 47, 371 N.E.2d 809. Importantly, the crucial fact underlying Kahn v. Kahn was that there was no pending divorce action: the court has dismissed the husband's claim for a divorce based on cruel and inhuman treatment and the wife's counterclaim for a separation had been withdrawn. In short, there was no action for a divorce pending and as a consequence the marital relationship had not been legally altered. Id. at 210, 401 N.Y.S.2d 47, 371 N.E.2d 809.
Despite the advent of equitable distribution in 1980 and other changes (discussed infra) to the DRL since then, Section 234 has not been amended since Kahn v. Kahn . But, a close reading of the statute suggests that Kahn v. Kahn should be limited solely to its underlying facts; i.e, that there was no pending action for a divorce when one of the parties sought to force the sale of the marital residence. When parced, Section 234 strongly suggests that the marital court can "determine any question as to the title to property arising between the parties." The statute then states that the "question as to the title" can be made in "one or more orders from time to time before or subsequent to final judgment." At the crux, the question is whether the potential sale of the property by one of the spouses can be considered a "question as to title."
There is no question that in New York a spouse may sell their interest in the marital residence, even if held as tenants by the entirety. In V.R.W., Inc. v. Klein , 68 N.Y.2d 560, 510 N.Y.S.2d 848, 503 N.E.2d 496 (1986) the Court of Appeals explained that "since the status of a tenant by the entirety is reserved exclusively to those co-owners who are married to each other, the interest acquired by a grantee or mortgagee of such a unilateral conveyance is not denominated a tenancy by the entirety, but rather is labeled a tenancy in common." Id. at 565, 510 N.Y.S.2d 848, 503 N.E.2d 496. Importantly, as the Court of Appeals noted, the right of survivorship, inherent in a tenancy by the entirety survives the sale: the interest of the buyer of the seller's interest can, if the seller predeceases the former shared tenant, be extinguished.
Furthermore, a court can permit the sale of separate property, even if the divorce is pending. Y.L. v. L.L. , 2020 NYLJ LEXIS 1434 (Sup. Ct Richmond Cty. 2020)
The advent of equitable distribution after the Court of Appeals decision in Kahn v. Kahn injects a new variable into the judicial quiver as trial courts seek to accelerate resolution of disputed matrimonial matters. As one commentator noted:
Enactment of equitable distribution drastically affected the property rights of married individuals by making the legal form of title to property acquired by either spouse during the marriage irrelevant in determining the individual property rights of each spouse upon divorce. All property obtained by either spouse during the marriage becomes "marital property" unless the spouses have agreed in advance to keep certain interests separate. Upon divorce, the marital property is subject to equitable distribution by the court ....
Ellis, NOTE: PROTECTING THE RIGHT TO MARITAL PROPERTY: ENSURING A FULL EQUITABLE DISTRIBUTION AWARD WITH FRAUDULENT CONVEYANCE LAW, 30 Cardozo L. Rev. 1709 (2009). In many divorces, the most important aspect of any equitable distribution of marital property occurs when the marital residence is sold. But, given the restrictions imposed by Kahn v. Kahn , one of the two spouses must wait until the completion of the divorce and entry of the judgment for the sale and distribution of proceeds, even if equitable factors suggest that a sale — and distribution — should occur sooner.
Two other factor drive a further examination of the rule in Kahn v. Kahn . In 2010, the Legislature enacted no-fault divorce, adding Section 170(7) to the DRL. This Court, in an opinion that was affirmed by the Fourth Department and seems to have become the rule in New York, held that the Legislatures’ enactment of Section 170(7) permitted either spouse, through a sworn statement that their marriage was irretrievably broken down, to establish the grounds for a divorce. Palermo v. Palermo , 35 Misc. 3d 1211(A), 2011 WL 7711557 (Sup. Ct. Monroe Cty. 2011)aff'd 100 A.D.3d 1453, 953 N.Y.S.2d 533 (4th Dept. 2012). As a practical matter, if one spouse makes a sworn statement consistent with the requirements of Section 170(7), the divorce becomes a certainly. The only remaining issues involve equitable distribution and support. But the declaration of a claim under Section 170(7) has the practical consequence of guaranteeing the termination of the tenancy-by-the-entirety because the divorce will occur and neither a judge nor a jury can vitiate the spouse's declaration as grounds for the divorce.
The arrival of no-fault divorce raises a question concerning the continued application of the Court of Appeals holding in Kahn v. Kahn . There, the Court of Appeals intoned that "unless a court alters the legal relationship of husband and wife," a court has no power to sever the tenancy-by-the-entirety. Kahn v. Kahn , 43 N.Y.2d at 210, 401 N.Y.S.2d 47, 371 N.E.2d 809. Now, a sworn declaration under Section 170(7) alters the legal relationship between husband and wife — unless revoked or withdrawn — and dictates that a judgment of divorce will follow, after the court decides the support issues and equitably divides the marital property. In short, under Palermo v. Palermo , the sworn statement of irretrievable breakdown alters the husband and wife relationship and the tenancy by the entirety ownership of the real property. Because the divorce is certain, both spouses, upon the filing of the complaint, acquire or confirm their equitable share in the residence. As a matter of law to all third-parties, the tenancy may be preserved but, as a matter of equity between the spouses, the tenancy by the entirety is severed. The distribution of assets and support obligations, while necessary to support a final judgment of divorce under Section 170(7), are all after-the-fact issues of equity and law for the court.
Based on this analysis, the facts underlying and justifying the decision in Kahn v. Kahn are significantly undercut by the enactment of equitable distribution and no-fault divorce under Section 170(7). In Kahn , there was no pending claim for divorce before the Court: the lower court had dismissed the cruel and inhuman compliant and the counterclaim had been withdrawn. Based on the pleadings, there was no prospect of a divorce and even if the claim under Section 170(1) for cruel and inhuman treatment resurfaced, that claim would need to be resolved as a matter of fact by either the judge or a jury. Faced with the prospect that no divorce was possible and that any renewed claim for a divorce would need resolution of a disputed factual issue before any judgment could be issued, the Court of Appeals saw no prospect for a divorce to sever the tenancy by the entirety and held that it should remain in tact until the certainty of a divorce was assured. The facts that caused the Court of Appeals to refuse to grant a pendente lite sale of the marital residence are largely squelched by virtue of the advent of equitable distribution and the guaranteed divorce on grounds of a declared irretrievable breakdown without further factual findings available to spouses under Section 170(7).
In litigation since Kahn v. Kahn , a number of New York's lower courts have strained to apply equitable principles and alleviate the sometimes harsh consequence of a spouse's inability to sell the principal residence during the pendency of the divorce, even if equitable factors might favor that result. In one recent matter, the First Department seemingly agonized over a dispute relating to the continued possession or sale of the marital residence. In Taglioni v. Garcia , 200 A.D.3d 44, 157 N.Y.S.3d 7 (1st Dept. 2021), a couple argued over maintaining the marital residence. The occupant spouse demanded that she remain in a $6 million townhouse during the duration of divorce, which the spouse estimated could go on for years and the occupant refused to sell the property unless the non-occupant spouse paid for a rental apartment in Manhattan. The trial court, after examining a range of proposals and counter-proposals, ordered the sale of property.
The First Department reversed, relying, in significant part, on Kahn v. Kahn . The majority held that there was no firm agreement requiring sale of the property and the occupant could stay in the property until final disposition of the divorce. The two-judge dissent disagreed, straining to find that there was an agreement on the sale and that the property — which could have provided large distributions to each spouse — should be sold before the final judgment. In reaching that conclusion, the dissent quoted an obviously frustrated trial judge at part of his attempts to resolve the sale of the residence with the attorneys for the spouses:
"That's another issue that was discussed ad nauseum and it should get done. I mean, the point of these conferences is not to go backwards, it's to go forwards. So the deal was that there was going to be a buyout of East Hampton, the deal was the townhouse was going to be sold after necessary repairs. The deal was that the Chubb monies were going to be used for the repairs of the townhouse. There's no reason to keep on revisiting these issues, just get it done."
Id. at 12, 157 N.Y.S. 3d 7. Based on these discussions between the attorneys for each spouse in the record on appeal, the two dissenters argued that the lower court could properly implement "the parties contemplated agreement as to the sale of the marital residence." What is striking about the dissent is that two judges were willing to enforce a "contemplated agreement," which was never signed and was apparently based solely on an exchange of proposals. The dissent notes that the reluctant spouse had no intention of keeping the residence. Any examination of the underlying facts in Taglioni v. Garcia easily reveal what was happening: the occupant spouse was using the inability of the non-occupant spouse to force a sale of the residence during the pendency of the divorce to leverage additional concessions from the non-occupant spouse, including that upon sale the occupant — who would receive their share of the equity in the property — would have a comparable rental paid at another location by the party seeking the sale until the divorce was final. Simply put, the occupant spouse was sitting on the non-occupant spouse's equity in the residence — without paying for it — and simultaneously seeking further concessions from the spouse before she agreed to sell the property.
As evidence of the dissent's concerns about the equities involved, their opinion relies on facts and comments before the trial judge in court conferences. Other than a reference to Kahn and a coordinate First Department decision, the dissent focuses almost solely on the facts of the interplay between clients and counsel and the comments made in the presence of the trial judge. By citing the trial judge's comments and the comments of counsel for the parties, the dissent highlights the equitable variables that should be part of any judge's determination regarding the sale of a marital residence pendente lite. The occupant spouse was changing their mind and repeatedly taking steps to delay the sale, all to the disadvantage of the displaced spouse. In addition, as the dissent notes, the occupant spouse never explicitly opposed the sale price, never added any terms to the listing contract or the terms of sale and did not dispute that the property would eventually be sold.
In Taglioni v. Garcia , the equilibrium that the Legislature designed in allocating broad equitable powers to trial judges in matrimonial matters is clipped in favor of a spouse, using the title-based logic of Kahn v. Kahn , to prevent their opposing spouse from tapping into the latter spouse's share of the marital equity. The majority's application of Kahn v. Kahn in this situation frustrates the purposes of equitable distribution and its implicit command that matrimonial judges fairly and equitably distribute marital assets. Restoring a trial judge's equitable power to order a sale during the pendency of a divorce, if justified by equitable factors, would seem to better serve the goals of equitable distribution. If a judge, encountering a divorce under Section 170(7) knows that the tenancy will be severed, then the judge can determine when a sale — before or after granting the judgment — will best serve the interests of the family unit and both spouses.
An old-fashioned law school diagnosis of this decision demonstrates the judicial quandary posed in Taglioni v. Garcia : three judges — the trial and two dissenters — were willing to balance the extant equities in the context of a divorce and take what some might characterize as the radical step to enforce a contract for the sale of real property even though there was no evidence that it was in a writing signed by both parties. See generally General Obligations Law § 5-703 (2) (contract for ... the sale, of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his [or her] lawful agent thereunto authorized by writing). Three judges — namely the three that mattered on the Appellate Division — were unwilling to do so. The fact that half of the judges who heard this dispute were willing to transform the "exchange of proposals" between attorneys into an unwritten "agreement" is evidence of the dissenters’ and trial judge's firm determination that equity, in this marital dispute, should trump the legal requirements that an agreement to sell or transfer real property be in a writing signed by the parties.
As further evidence of a trial court's frustration, in A.P. v F.L. , 2017 NY Misc. LEXIS 4580 (Sup. Ct. Queens Cty. 2017) the marital residence was under a foreclosure order. The non-occupant spouse stated that he had stopped contributing to the mortgage after he filed for divorce since his other expenses "drained" him. After examining equitable factors including the financial circumstances of the parties and because the home was in imminent danger of dissipation through foreclosure, the court appointed a receiver, with the usual powers and directions, to sell the marital residence forthwith, even though the divorce was not yet final. In other instances in which courts have ordered the sale of a marital residence — after the divorce judgment is entered — the courts have considered the same equitable variables that would be evident in any sale before the judgment of divorce. In Sprole v. Sprole , 145 A.D.3d 1367, 45 N.Y.S.3d 233 (3d Dept. 2016), the Third Department, considering the equities of a post-judgment order, noted that the trial court had considered the custodial status and age of the children, as well as the absence of any proof that the spouse could afford to maintain the marital residence if awarded exclusive use and possession, and upheld the decision to order the sale. In Bernard v. Bernard , 126 A.D.3d 658, 659, 5 N.Y.S.3d 233 (2d Dept. 2015), the Second Department enunciated the equitable factors that always accompany a court order to sell marital property:
In determining whether the custodial parent should be granted exclusive occupancy of the marital home, the trial court should consider, inter alia, the needs of the children, whether the noncustodial parent is in need of the proceeds from the sale of that home, whether comparable housing is available to the custodial parent in the same area at a lower cost, and whether the parties are financially capable of maintaining the residence
Id. After listing these equitable factors, the Appellate Division upheld the sale order.
One other factor militates in favor of re-evaluating Kahn v. Kahn . The Legislature has given trial courts broad powers to decide not only "title questions" to property ( Section 234 ) but has also given the trial courts broad powers to decide who can use the residence during the pendency. Domestic Relations Law § 236 (B) (5) (f) provides that the Court may, in its discretion, make an order regarding the use and occupancy of the marital residence "without regard to the form of ownership of such property." Exclusive possession of the marital residence is often granted to the custodial parent. See, e.g., Cabeche v. Cabeche , 10 A.D.3d 441, 780 N.Y.S.2d 909 (2d Dept. 2004). Without a further legislative directive, the New York courts have engrafted a broad series of equitable considerations in making an "exclusive use and possession" determination pendente lite including the needs of the children, whether the noncustodial parent is in need of the proceeds from the sale of that home, whether comparable housing is available to the custodial parent in the same area at a lower cost, and whether the parties are financially capable of maintaining the residence. As one factor in evaluating exclusive use and possession, the "need of the custodial parent to occupy the marital residence [must be] weighed against the financial need of the parties." Marino v. Marino , 183 A.D.3d 813, 123 N.Y.S.3d 638 (2d Dept. 2020) ; Strohli v. Strohli , 174 A.D.3d 938, 107 N.Y.S.3d 324 (2d Dept. 2019) ; Sotnik v. Zavilyansky , 101 A.D.3d 1102, 956 N.Y.S.2d 514 (2d Dept. 2012) ; Goldblum v. Goldblum , 301 A.D.2d at 568, 754 N.Y.S.2d 32 (2d Dept. 2003).
Importantly, an analysis of the above-cited cases demonstrates how New York's trial courts have balanced important equities in considering the sale of a marital residence, after a divorce. In Goldblum , the court said that there was no alternative housing available for the wife and children but, in an equitable gesture, the court held that the husband did not have to pay the wife her share of the increase in value of the residence until she vacated the premises. In Marino v. Marino , the appeals court refused to order the sale of the property, post-judgment, because the balancing of equities disfavored sale. The Court held that the occupant spouse had sole custody of the minor children, two of whom had special needs and required stability and the non-occupant spouse failed to establish an immediate need for the proceeds of the marital residence, especially in light of the equitable distribution award. In Sotnik v. Zavilyansky , the "balancing" of the equities, cited by the Court, favored having the mother and children stay in the house after the divorce. In Mosso v. Mosso , 84 A.D.3d 757, 924 N.Y.S.2d 394 (2d Dept. 2011), the court, while considering a request for post-divorce exclusive use and possession, analyzed the same equitable factors, concluding the spouses were capable of maintaining the marital residence, suitable comparable housing could not be obtained at a lesser cost than the cost to maintain the marital residence and the non-occupant spouse failed to establish an immediate need for his share of the proceeds of the sale of the marital residence. Id. at 759, 924 N.Y.S.2d 394. In Strohli v. Strohli , the appeals court again balanced the equities and concluded the occupant spouse was granted physical custody of the parties’ children and that the non-occupant failed to establish an immediate need for his share of the proceeds of the sale of the marital residence. Finally there are series of other decisions in which New York courts, mindful of the need to avoid wasteful dissipation of marital assets, have ordered sale of marital residence pendente lite. In Stratton v. Stratton , 972 N.Y.S.2d 147 (Sup. Ct. Sullivan Cty. 2013), the court found a spouse placed the most significant marital asset in imminent danger of dissipation through foreclosure by failing to make any payments as previously directed by the trial Court in the pendente lite order. The same spouse willfully and intentionally refused to sign a contract of sale when the plaintiff presented a ready, willing and able buyer for the property. Faced with these facts, the court appointed a receiver to sell the property and hold the funds in escrow until completion of the divorce. In
In this Court's prior opinion is Harlan v. Harlan , 46 Misc. 3d 1003, 998 N.Y.S.2d 769 (Sup. Ct. Monroe Cty. 2014), this Court reviewed in detail the impact of Kahn on the question of selling a very expensive marital residence during the pendency of a divorce. The Court said:
In this court's view, it would be impossible to argue—the husband does not even attempt to do so in this case—that the excessive costs for the marital property might justify a prejudgment sale order under the theory expressed inStratton v. Stratton . This court is unsure whether the holding in Stratton v. Stratton even survives a vigorous analysis under the rubric of Kahn v. Kahn . But, the practical considerations underlying Stratton v. Stratton — how to stretch or preserve family resources to benefit both parties during the pendency of a divorce — have a pragmatic appeal. The substantial housing costs in this case obviously eat into the available family resources to pay maintenance. And while temporary maintenance has specific statutory considerations that underlie it, the requirement that a spouse reside in an expensive home during the pendency of the action (while the nonresident spouse pays the mortgage and costs) is not among them.
In considering whether an ordered sale before a final judgment is even prudent, this court notes that the legislature, in suggesting criteria to be considered when awarding temporary maintenance, shared the same practical-financial concern as this court that parties should attempt to reduce expenses during the pendency of divorce proceedings. The temporary maintenance guidelines include a caution that the courts should not permit "wasteful dissipation of marital property." (Domestic Relations Law § 236 [B] [5-a] [e] [1] [e].) The inclusion of this provision, among the considerations that a court could consider in a temporary maintenance application, suggests that the legislature was concerned that temporary maintenance be directed to preserve family assets, as prudently as possible, while benefitting the recipient and not others. While this statutory command, broadly read, might suggest that a prejudgment sale, to prevent "wasteful dissipation" of the couple's only source of income (the husband's paycheck), might be justified in this case, this court declines to extend the principle that far. The large household expenses in this case, while they may not rise to the level of "wasteful dissipation," surely exhaust family resources. The husband is paying for a luxury (maintaining two residences) that a split family cannot afford. In short, the tenor of the temporary maintenance guidelines, in seeking to prevent "wasteful dissipation," suggests that the legislature wanted couples to be thrifty, while maintaining pre-separation lifestyles during the divorce process. The thrift envisioned by the legislature evades the couple in this case because an expensive house drains family resources. Paying for an overly expensive house, that cannot be sold under the principles of Kahn v. Kahn , strikes this court as a waste of money that could otherwise provide for the wife and her daily needs. This court cannot change the impact of Kahn v. Kahn on families mired in divorce with the unmanageable expense of a marital residence, but at some point, the Court of Appeals—or the state legislature—should take another look at the impact of this resource-draining precedent on families in the midst of divorce litigation.
Id. Suffice to say, this Court, years later, has stopped waiting for changes from above and now — "by taking another look" — simply examines the equities, as envisioned by equitable distribution, to reach the conclusion that a sale, pendente lite, is appropriate in this matter.
St. Angelo v. St. Angelo , 130 Misc. 2d 583, 496 N.Y.S.2d 633 (Sup. Ct. Suffolk Cty. 1985), the court similarly ordered the sale of property before a divorce when the equitable factors — foreclosure was imminent, the wife had a buyer ready, willing an able to purchase, the husband was not supporting the mortgage, the wife could not afford the cost and there were no issue issues, as the couple had no infant children. These authorities, which have largely been ignored because of other courts strict compliance with Kahn v. Kahn , nonetheless clearly demonstrate that New York's matrimonial courts can balance the equities in resolving whether a marital residence should be sold after a divorce and the same judicial analysis, balancing the same equities, seems eminently practical for trial judges during the pendency of the action. In that regard, in this instance, the financial strain of supporting an overpriced and over financed residence should be a factor in both resolving exclusive use and possession and in any consideration of any sale of the property pendente lite.
The court in St. Angelo v. St. Angelo concluded that Domestic Relations Law § 234 extends judicial power over the possession of both real and personal property. The power was clearly designed to be utilized without regard to the state of title (Report of Joint Legislative Committee on Matrimonial and Family Laws, 1963 NY Legis Doc No. 34, at 81, 84-85; 2 Foster-Freed, Law and the Family § 22.37, at 103), and it gives the court "broad and flexible control" over the possession of property (Siegel, 1964 Practice Commentary, McKinney's Cons Laws of NY, Book 14, 1982-1983 Pocket Part, Domestic Relations Law § 234, p 33). 130 Misc. 2d at 584, 496 N.Y.S.2d 633.
In sum, continued adherence to the Court of Appeals directive in Kahn v. Kahn exposes an anomaly in New York marital law. Under Kahn v. Kahn , a trial court cannot balance the equities of all the family — children included — in deciding whether to sell the marital residence while a no-fault divorce is pending but the same court can balance the same equities in deciding exclusive use and possession of the property during the pendency and can apply the same equitable factors in the judgment of divorce or any post-judgment decision. It is illogical that the New York trial courts would have broad powers to balance the equities of a family to decide possession of property during a divorce, ownership of the property after the divorce but not have the power, when balancing the same equities, to order a sale during the pendency of the divorce. The equitable factors in play during the divorce — the cost of maintaining and staying in the house, the financial strain on either spouse or the family overall, the impact of mortgage and tax costs, the income tax consequences of keeping the house and who gets the tax benefits, the consequences to and need for stability for the children, the availability of reasonable alternative housing for any displaced spouse — are the same factors that New York matrimonial courts have weighed in the four decades since equitable distribution. Rather than straining to find an agreement in a long-delayed divorce — the case in Taglioni v. Garcia — or await a ruinous foreclosure — the case in A.P. v F.L. — or pump family resources into a residence that is underwater and draining family finances — the case in this instance — New York matrimonial courts should have the power to balance the equities of a potential sale during the pendency of a no-fault divorce. This Court is not suggesting that the sluice gates for sales of marital property pendente lite be opened willy-nilly but, because the Legislature vested broad equitable powers to matrimonial judges under equitable distribution, those powers should permit a sale of a marital residence during the pendency if a balancing of well-known and often easily defined equities favor that result in the best interests of the family.
When this logic is applied to the facts and circumstances of this matter, this Court concludes that a balancing of equities, required under the concept of equitable distribution in this no-fault divorce, distinguish this matter from the reach of Kahn v. Kahn . The equities, when balanced, favor a sale prior to the entry of the judgment of divorce and this Court so orders that sale and requires the occupant spouse to sign the purchase and sale offer, sign the closing documents and vacate the property pursuant to the sale agreement. An order, submitted previously, will be signed to effectuate that conclusion.