JH v. CH, 2024 NY Slip Op 50220 - NY: Supreme Court, Putnam 2024:
"It is ORDERED that the applications are disposed of as follows.
The applications before the Court compel a re-examination of Kahn v. Kahn, 43 NY2d 203 (1978).
There, the Court of Appeals held that real property owned by spouses as
tenants by the entirety may not be ordered sold prior to entry of a
Judgment of Divorce, as the tenancy cannot be severed in the absence of a
judgment. Although tenancies by the entirety remain a part of the real
property law of New York (see, EPTL §6-2.2), the nature and legal
incidents of the union of person in husband and wife in marriage—upon
which tenancy by the entirety is founded—have over the course of time
been fundamentally altered.[1] Moreover, the post-Khan
adoption and evolution of the Equitable Distribution Law (DRL §236),
"no fault" divorce (DRL §170[7]) and the Automatic Orders (DRL
§236B[2][b]) have resulted in a significant adjustment of the legal
criteria bearing upon the dissolution of marriage and its attendant
economic ramifications. In consequence, the foundation on which Kahn v. Kahn rests has been significantly weakened if not destroyed.
FACTUAL BACKGROUND
The parties were married on July 12, 2003. They have two daughters,
ages 14 and 8. The older child requires special attention due to medical
conditions and learning disabilities. She will never be
self-sufficient. For years, the parties enjoyed a relatively lavish
lifestyle, maintaining an apartment in New York City in addition to a
residence in Garrison, and sending their children to high-priced
Manhattan schools. They did so based primarily on the income Defendant
received from a manufacturing enterprise, and in part with financial
assistance from Plaintiff's parents. Plaintiff opted to function as
homemaker in part to provide care for the older child, although she is
now employed in a sales position which affords her flexible hours and
commission-based pay. Her 1099 Form for 2022 reflects compensation of
$5,700. With the onset of the Covid pandemic the parties relinquished
their Manhattan apartment, and they resided together with their children
in the marital home in Garrison until the tension became too great.
Plaintiff now lives with her parents and the children, and the parties
share an access schedule. The marital home is occupied by Defendant. A
foreclosure proceeding was commenced in 2019 and discontinued upon
Defendant's payment of $40,000 in July 2019. However, Defendant having
failed to make the August 2019 payment the mortgage is once again in
default and foreclosure proceedings are once again pending.
Defendant thereafter sought a loan modification with Wells Fargo
Bank. The proposed Modification Agreement lists both parties as
"Borrowers."[2]
Plaintiff would be obligated on the proposed forty (40) year Mortgage
but not on the Promissory Note. The new principal balance would be
$881,988.50, with monthly payments of principal, taxes, and insurance
totaling $5,441.36.[3]
The Bank's appraisal of the marital residence valued the property at
$1,400,000. There is an outstanding mortgage with a current principal
balance of approximately $900,000. Without mortgage payments for several
years, the accrual of additional secured debt for past interest,
property tax and insurance payments is substantial. In addition, there
is a home equity line of credit in the amount of approximately $300,000
(as of June 2019), and substantial judgments exceeding $400,000 against
Defendant including:
American Express (as of 4/9/21) $84,480.61
Cavalry SPV I, LLC, as assignee of Citibank (as of 9/28/20) $217,774.30
American Express (as of 1/11/23) $103,899.60
Although it is unknown whether any portion of the outstanding
judgments has been satisfied, it is evident that the parties have little
or no equity in the marital home. Defendant's Statement of Net Worth
also lists credit card debts to Barclay's Bank in the amount of
$108,046, to Bank of America in the amount of $99,049, to UBS Bank in
the amount of $193,072, and to Wells Fargo in the amount of $49,747, but
those debts, totaling $449,914, have not been reduced to judgment.
Defendant has been the primary source of family income during the
marriage. However, there are open issues as to Defendant's income at the
time of submission of this motion. He claimed a net income of $3,500 per week (i.e., $182,000 per annum), which suggests a gross
annual income of approximately $250,000. There are a variety of issues
arising from Defendant's business dealings and non-compliance with
discovery issues. A forensic accounting has been ordered at an
additional expense to the parties (see, NYSECF Docs. No. 271,
282). Defendant's Statement of Net Worth lists his monthly expenses as
$25,263 (i.e., $303,156 per annum), an amount that exceeds his claimed
income by approximately 100%. His monthly pendente lite
maintenance payments have been sporadic in frequency and amount. There
are child support arrears as well. He has been unemployed but claims "I
am about to be hired in new employment and I expect I will be
compensated at over 200K per year. I expect the job in the next 30 days.
I just had my last interview" (NYSECF Doc # 289, ¶8). Although no
details about his prospective employer, position, location, salary, or
benefits were provided, Defendant now claims that he is employed at an
annual salary of $150,000.
THE PENDING APPLICATIONS
Pending before the Court are Defendant's application for an Order
directing Plaintiff to execute the proposed 40-year Mortgage and
Plaintiff's application for inter alia an order directing the
immediate sale of the marital residence. At the call of the calendar,
the Court was prepared to set a briefing schedule, but as the deadline
for acceptance of the mortgage modification was expiring, Defendant felt
compelled to respond orally to the Plaintiff's motion. After Defendant
and counsel were afforded the opportunity to review Plaintiff's papers
the Court heard oral argument on both applications and reserved
decision. There are two issues before the Court. First: May the Court,
or should the Court, impose upon a divorcing couple a 40-year mortgage
to preserve a marital asset that lacks any clear value? Second: May the
Court in the face of Kahn v. Kahn order a sale of the marital residence held as tenants by the entirety in the absence of a Judgment of Divorce?
LEGAL ANALYSIS
I. The Circumstances Plainly Do Not Warrant A New 40-Year Mortgage
The Court is asked to compel Plaintiff to execute a mortgage in the
hopes of saving an asset without value for a family with no known or
apparent ability to afford additional debt. Defendant relies on the fact
that Plaintiff was willing to do so in a prior foreclosure proceeding
and claims that the circumstances are no different now. Defendant
asserts such an order is necessary to prevent the dissipation "of the
main asset of the marriage." Plaintiff's position is clear: "I do not
want to have any financial ties with Defendant and his constant
financial games and maneuvers" (NYSECF Doc. # 307, ¶6). Plaintiff
further asserts she will be harmed by signing the Mortgage even without
liability on the Note. The likelihood of a future default by Defendant
will affect Plaintiff's credit and ability to secure housing for herself
and her children, especially when Defendant is before the Court
unemployed or recently employed, without income, and not paying child
support. From counsel's statements, Defendant apparently anticipates
that a new mortgage will take years to foreclose while he resides in the
residence, leaving Plaintiff unable to move on with her life. It is
difficult to find a cogent rational reason to support Defendant's
request for a new 40-year mortgage on the marital home. The application
is therefore denied.
II. The Pendente Lite Sale of the Marital Home: Revisiting Kahn v. Kahn
Any realistic assessment of the parties' situation would lead to the
conclusion that the marital home must be sold to salvage any remaining
equity or at least to reduce the financial loss. The equitable
considerations supporting that conclusion were masterfully articulated
by Justice Richard A. Dollinger in D.R.D. v. J.D.D., 74 Misc 3d 237 (Sup. Ct. Monroe Co. 2021) and in Harlan v. Harlan, 46 Misc 3d 1003 (Sup. Ct. Monroe Co. 2014). Per Kahn v. Kahn, however, the tenancy by the entirety arising from the parties' marriage impedes the Court from taking appropriate action pendente lite and prior to the entry of a Judgment of Divorce.
In Kahn, the Court of Appeals addressed the question "whether,
in a matrimonial action, a court may order the sale of real property
held by the parties as tenants by the entirety, even though the marital
relationship has not been legally altered." Id., 43 NY2d at 206. Concerning tenancies by the entirety, the Court observed:
In contemplation of the law, husband and wife were but one person. (Matter of Klatzl, 216 NY 83, 85). Thus, a conveyance to them by name was a conveyance to only one person. (Stelz v. Shreck, 128 NY 263, 266).
Because of the marital relationship they were said to be seized of the
estate in its entirety: each being seized of the whole rather than of
any undivided portion. (Bertles v. Nunan, 92 NY 152, 156; Stelz v. Shreck, 128 NY, at p 266, supra; Hiles v. Fisher,
146 NY 306, 312). At death, the survivor took the estate not because of
a right of survivorship, but because the survivor remained seized of
the whole. (Bertles v. Nunan, 92 NY, at p 156, supra; Jackson v. McConnell, 19 Wend 175, 178; Stelz v. Shreck, 128 NY, at p 266, supra).
Kahn, 43 NY2d at 206-207. The Kahn
Court continued, "[t]he common law soon recognized that in addition to
death a legal dissolution of the unity of husband and wife would
necessarily affect the continuing validity of a tenancy by the
entirety." Id., at 207. The Court quoted this highly salient principle from Judge Peckham's opinion in Stelz v. Shreck, 128 NY 263 (1891):
When the idea upon which the creation of an estate by the
entirety depends is considered, it seems to me much the more logical as
well as plausible view to say that as the estate is founded upon the
unity of husband and wife, and it never would exist in the first place
but for such unity; anything that terminates the legal fiction of the
unity of two separate persons ought to have an effect upon the estate
whose creation depended upon such unity.
Kahn, 43 NY2d at 207 (quoting Stelz v. Shreck, 128 NY at 267) (emphasis added).
In Kahn, no legal alteration of the parties' marital status
ever occurred: the wife's action for a separation was withdrawn and the
husband's action for a divorce was denied. The Appellate Division
nevertheless ordered a sale of the marital residence. Reversing, the
Court of Appeals held 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." Kahn, supra, 43 NY2d at 210. Interestingly, the Court distinguished Caplan v. Caplan, 38 AD2d 572, and Pearson v. Pearson, 34 AD2d 797,
on the grounds that in each of those cases a separation had been
granted, all the while recognizing that "a separation decree does not
dissolve the marriage." See, Kahn, supra.
B. Tenancy By The Entirety and the Union of Person In Husband and Wife in Marriage
The grounding of the concept of tenancy by the entirety in the union
of person in husband and wife in marriage was eloquently articulated by
the Court of Appeals in Bertles v. Nunan, 92 NY 152 (1883):
By the common law, when land was conveyed to husband and
wife they did not take as tenants in common, or as joint tenants, but
each became seized of the entirety, per tout, et non per my, and
upon the death of either the whole survived to the other. The survivor
took the estate, not by right of survivorship simply, but by virtue of
the grant which vested the entire estate in each grantee. During the
joint lives the husband could, for his own benefit, use, possess and
control the land, and take all the profits thereof, and he could
mortgage and convey an estate to continue during their joint lives, but
he could not make any disposition of the land that would prejudice the
right of his wife if she survived him.
This rule is based upon the unity of husband and wife, and
is very ancient. It must have had its origin in the archaic period of
our race, and it colored all the relations of husband and wife to each
other, to the law and to society. In 1 Blackst. Com. 442, the learned
author says: "Upon this principle, of an union of person in husband and
wife, depend all the legal rights, duties and disabilities that either
of them acquired by the marriage. I speak not, at present, of the rights
of property, but of such as are merely personal. For this reason a man
cannot grant any thing to his wife or enter into covenant with her; for
the grant would be to suppose her separate existence, and to covenant
with her would be only to covenant with himself." They were not allowed
to give evidence against each other, mainly because of the union of
person, for if they were admitted to be witnesses for each other they
could contradict one maxim of the law, nemo in propria causa testis esse debet; and if against each other they would contradict another maxim, nemo tenetur se ipsum accusare.
Bertles v. Nunan, supra, 92 NY at 156-157.[4]
As the Court of Appeals subsequently recognized in Hiles v. Fisher, 144 NY 306 (1895), the husband's common law right to full control of land held via tenancy by the entirety with his spouse is not
incident to the concept of a tenancy by the entirety—which is governed
by a principle of equality of estate as between husband and wife—but
derives instead from "the general principle of the common law which
vested in the husband jure uxoris the rents and profits of his wife's lands during their joint lives. (2 Kent Com. 130; Stewart on Husb. & Wife, §308)." See, id., 144 NY at 313-314. In other words, the common law doctrines of tenancy by the entirety and jure uxoris
are conceptually distinct, such that with the legal demise of a
husband's right to control his wife's property the Court of Appeals
recognized, in Goldman v. Goldman, 95 NY2d 120 (2000), that "[a]s tenants by the entirety, both spouses enjoy an equal right to possession of and profits yielded by property." Id.,
at 122. However, the ongoing evolution of married women's rights to
property and otherwise, grounded in a recognition of the wife's separate
legal identity, has over the course of time fundamentally altered the
nature and legal incidents of the union of person in husband and wife in
marriage upon which the tenancy by the entirety is founded.
In the 19th century, by a series of statutes including the Married
Woman's Property Acts of 1848 (ch. 200), 1849 (ch. 375), 1860 (ch. 90),
and 1862 (chs. 72 and 172), New York altered "the union of person in
husband and wife" by:
• In 1848, "secur[ing] to married women the enjoyment of
their real and personal property which belonged to them at the time of
their marriage, or which they might thereafter acquire by gift, grant or
bequest from third persons, and [ ] abrogate[ing] the common-law right
of the husband in and to the real and personal property of the wife." See, Hiles v. Fisher, supra, 144 NY at 314. See also, Darby v. Callaghan, 16 NY 71, 75-76 (1857).
• In 1849, giving married women express authority "to grant or dispose of her property." See, Bertles v. Nunan, supra, 92 NY at 159. See also, Darby v. Callaghan, supra.
• In 1860, "empower[ing] a married woman to perform labor
and to carry on business on her separate account; to enter into
contracts in reference to her separate real estate; to sue and be sued
in all matters having relation to her property, and to maintain actions
for injuries to her person." See, Bertles v. Nunan, supra.
• In 1867, providing that "husband and wife could, in civil actions, be compelled to give evidence for or against each other." See, id., 92 NY at 160.
• In 1876, providing that "they could, in criminal proceedings, be witnesses for and against each other." See, id.
In each of those measures the State recognized the separate
personhood of husband and wife as opposed to "the union of person in
husband and wife" as described in Bertles v. Nunan, supra.
This process continued apace until, in 1980, the U.S. Supreme Court
could state that "[n]owhere in the common-law world—indeed in any modern
society" is a woman denied "a separate legal identity." See, Trammel v. United States, 445 U.S 40, 52 (1980) (abrogating spouses' common law testimonial privilege). Since 1977, when Khan v. Khan
was decided, courts have continued to draw out the implications of
spouses' separate legal personhood. In 1984, for example, the Court of
Appeals—observing that New York had long ago rejected the common law
doctrine that a married woman's legal existence is "incorporated and
consolidated into that of the husband" (see, 1 Blackstone's Commentaries [1966 ed.], p. 430)—abrogated the husband's "marital exemption" from liability for rape. See, People v. Liberta, 64 NY2d 152, 164 (1984).
This dilution of the legal fiction of the union of person in husband
and wife in marriage set the stage for a wholesale revision post-Khan
of New York matrimonial law, including the Equitable Distribution Law
(1980), "No Fault" divorce (2010), and the Automatic Orders (2009). To
those we now turn.
C. The Impact of the Equitable Distribution Law, "No Fault" Divorce, and the Automatic Orders
1. The Equitable Distribution Law
"Chapter 281 of the Laws of 1980, enacted on June 19, 1980, achieved a
major and dramatic overhaul of the New York statutes which govern the
economic life of the family and measure the rights and obligations of
family members upon dissolution of the family unit . . . With the
enactment of the Equitable Distribution Law, the marriage relationship
[is] viewed, more modernly, as an economic partnership. `Upon its
dissolution, property accumulated during the marriage should be
distributed in a manner which reflects the individual needs and
circumstances of the parties regardless of the name in which such
property is held.' (Governor's Memorandum of Approval, McKinney's 1980
Session Laws, p. 1863)." McKinney's Cons. Laws of NY, Vol. 14, DRL §236,
Practice Commentaries (Scheinkman), p. 32 (2010).
Thus, the Equitable Distribution Law worked a sea-change in the legal
status of the marital relationship. It defines the unity of husband and
wife in marriage as consisting not in a "union of person" but rather in
an "economic partnership"; and it relegates claims grounded in title to
property to secondary status, providing instead for equitable
distribution of the economic fruits of that partnership, that is, of
what the statute calls "marital property":
The term "marital property" shall mean all property acquired by either or both spouses during the marriage and before . . . the commencement of a matrimonial action, regardless of the form in which title is held . . .
DRL §236B[1][c]. In other words, under the Equitable Distribution
Law, that which constitutes the union of husband and wife in
marriage—the economic partnership—is deemed to have ended upon commencement of a matrimonial action. Recalling Kahn,
"anything that terminates the legal fiction of the unity of two
separate persons ought to have an effect upon the estate [i.e., the
tenancy by the entirety] whose creation depended upon such unity." Kahn, 43 NY2d at 207 (quoting Stelz v. Shreck, supra, 128 NY at 267).
Commencement of a matrimonial action terminates the legal fiction of
unity as defined by the Equitable Distribution Law. When the prevailing
legal framework has so radically changed, why should ancient concepts of
title continue to prevent a pendente lite court-ordered sale of marital premises to advance the goals of the Equitable Distribution Law? Per Khan itself, the continuing viability of a tenancy by the entirety post-commencement is seriously in question.
2. "No Fault" Divorce
The seeds of "no fault" divorce were first planted in New York in
1966. Upon a legislative determination that "dead marriages . . . should
be terminated for the mutual protection and well being of the parties
and, in most instances, their children," DRL §170 was amended to provide
for "no-fault" dissolution of marriage upon the parties' living apart
for a prescribed period pursuant to an agreement or a judgment of
separation. See, Covington v. Walker, 3 NY3d 287, 290 (2004) (quoting 1966 Report of the Joint Leg. Comm. on Matrimonial and Family Laws); Gleason v. Gleason, 26 NY2d 28, 39 (1970);
DRL §170, subd. 5 and 6. Although permitting divorce on a "no fault"
basis, the 1966 reform respected the unity of spouses in marriage, as it
required either (1) the agreement of both spouses that their
marriage was no longer viable, and/or (2) objective evidence, i.e., the
parties' living apart for a substantial period of time without
reconciling, that the marriage was truly dead. This was the legal
framework in place in 1977, when Khan v. Khan was decided.
On this score, too, a post-Khan sea-change in the law has
occurred. In 2010, DRL §170 was again amended to provide for "no fault"
dissolution of marriage where:
7. The relationship between husband and wife has broken down irretrievably for a period of at least six months, provided that one party has so stated under oath.
No judgment of divorce shall be granted under this subdivision unless
and until the economic issues of equitable distribution of marital
property, the payment or waiver of spousal support, the payment of child
support, the payment of counsel and experts' fees and expenses as well
as the custody and visitation with the infant children of the marriage
have been resolved by the parties, or determined by the court and
incorporated into the judgment of divorce.
The plaintiff spouse's averment to an "irretrievable breakdown" is
uncontestable and establishes the cause of action for divorce as a
matter of law. See, Hoffer-Adou v. Adou, 121 AD3d 618, 619 (1st Dept. 2014); Palermo v. Palermo, 35 Misc 3d 1211(A) (Sup. Ct. Monroe Co. 2011), aff'd 100 AD3d 1453 (4th Dept. 2012).
The unity of spouses in marriage is brittle indeed if one spouse may
unilaterally and by unchallengeable fiat declare that the marriage is at
an end. In the absence of any defense to a DRL §170(7) cause of action,
divorce is essentially automatic. Here, the Complaint contains the
requisite assertion of irretrievable breakdown (NYSCEF Doc. # 2), and
despite Defendant's denial thereof his counterclaim contains the exact
same allegation (NYSCEF Doc. # 7, ¶ 4), which Plaintiff admitted in her
Reply (NYSCEF Doc. # 79 ¶1). The parties have stipulated that grounds
for divorce are resolved and that Plaintiff shall obtain a "no fault"
divorce pursuant to DRL §170(7) (Preliminary Conference Stipulation,
NYSCEF Doc. # 19, p.2). The divorce is all but inevitable, and the entry
of a judgment of divorce pursuant to DRL §170(7) is a formality. Once
again recalling Kahn, "anything that terminates the legal fiction
of the unity of two separate persons ought to have an effect upon the
estate [i.e., the tenancy by the entirety] whose creation depended upon
such unity." Kahn, 43 NY2d at 207.
The legal fiction of unity as defined by the Equitable Distribution Law
having been shattered by commencement of a matrimonial action, and one
party's uncontestable declaration that an irretrievable breakdown has
occurred having rendered the marriage "dead" in the eyes of the "No
Fault" divorce law and the divorce inevitable, the reasoning of Khan itself dictates that a tenancy by the entirety is at this juncture no longer viable.
On a further note, as the Court of Appeals observed in Kahn, a
formal dissolution of the marriage bond is not necessarily required
before a tenancy by the entirety may be severed: the Court acknowledged
that a decree of separation was sufficient, all the while recognizing
that "a separation decree does not dissolve the marriage." See id., 43 NY2d at 207.
In other contexts, formal entry of judgment of divorce has been reduced
to a ministerial act with no practical consequence on property rights. See, Cornell v. Cornell, 7 NY2d 164, 171 (1959) (permitting entry of divorce nunc pro tunc so long as rights vested in the interim are not affected). See also, Lynch v. Lynch, 13 NY2d 615 (1963); Brown v. Brown, 208 AD2d 485 (2d Dept. 1994); Van Pelt v. Van Pelt, 172 AD2d 659 (2d Dept. 1991).
To be sure, the entry of judgment pursuant to DRL §170(7) may not be
regarded as a pure formality, as the statute itself provides that
judgment may not be granted on the grounds of "irretrievable breakdown"
unless and until issues of equitable distribution, maintenance, child
custody and visitation, child support, and counsel and expert fees have
been resolved by the parties or determined by the court and incorporated
in the judgment. See, id. Cf., Matter of Forgione, 237 AD2d 438 (2d Dept. 1997).
The conclusion nevertheless obtains that, the parties having commenced
divorce proceedings and stipulated to a "No Fault" divorce—thereby
eviscerating the unity of person in husband and wife in marriage
underlying a tenancy by the entirety, there would appear to be no reason
to delay a legal severance of the tenancy where a balancing of the
equities would dictate a sale of the marital residence pendente lite to avoid financial hardship for the family and/or to preserve marital assets for equitable distribution.
A few New York courts have already reached that very conclusion. See, D.R.D. v. J.D.D., supra, 74 Misc 3d 237 (Sup. Ct. Monroe Co. 2021); Stratton v. Stratton, 39 Misc 3d 1230(A) (Sup. Ct. Sullivan Co. 2013); St. Angelo v. St. Angelo, 130 Misc 2d 583 (Sup. Ct. Suffolk Co. 1985). For reasons shown above, this Court concurs with Justice Dollinger in D.R.D. v. J.D.D., supra, that "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 [DRL] Section 170(7)." Id., 74 Misc 3d at 246. Justice Dollinger nevertheless struggled to evade the impact of Khan. He wrote:
[C]ontinued adherence to the Court of Appeals' directive in Khan v. Khan 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[5] and can apply the same equitable factors in the judgment of divorce or any post-judgment decision.[6]
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[7] —or await a ruinous foreclosure—the case in A.P. v. F.L.[8]
—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.
D.R.D. v. J.D.D., supra, 74 Misc 3d at 253-254.
This Court concurs with Justice Dollinger's analysis, so far as it
goes, but further believes that his conclusion that a matrimonial court
is empowered despite Khan to order the pendente lite sale of the marital home is substantially bolstered by the post-Khan enactment of the Automatic Orders in 2009. To that we now turn.
3. The Automatic Orders
In 2009, the Equitable Distribution Law was amended to incorporate
"Automatic Orders" regulating the disposition of matrimonial litigants'
property pendente lite. See, DRL §236B(2)(b)(1-5). Prior to 2009,
the matrimonial court's authority to deal with property during the
course of divorce proceedings and prior to judgment was located in DRL
§234, which, per Khan v. Khan, does not permit the severance of a tenancy by the entirety pendente lite. See id., 43 NY2d at 208-210.
In the pre-Equitable Distribution era this reading of DRL §234 served a
salutary purpose. Husbands typically had a significant economic
advantage over non-working wives, maintenance and child support
guidelines did not exist, and the pre-judgment sale of a marital
residence held by the spouses as tenants by the entirety could seriously
jeopardize the economic security and well-being of the wife and
children.
However, with the advent of the Equitable Distribution Law, as Judge
Scheinkman has pointed out, the Automatic Orders have effectively
superseded DRL §234: "the key statutory provision is no longer Section
234, the general authority for the matrimonial court to deal with
property, but in the Equitable Distribution Law itself." See,
McKinney's Cons. Laws of NY, Vol. 14, DRL §236, Practice Commentaries
(Scheinkman), C236B:48, p. 328 (2010). The Automatic Orders impose
serious restraints on the parties' pendente lite disposition of property so as "to prevent both parties from dissipating assets, [and] incurring unreasonable debts" (see,
Memorandum in Support of Legislation). By the same token, the Orders
afford the matrimonial court enhanced flexibility to deal with property
prior to judgment to address those same issues and to promote the
purposes of the Equitable Distribution Law. DRL §236B(2)(b)(1) provides:
Neither party shall sell, transfer, encumber, conceal,
assign, remove or in any way dispose of, without the consent of the
other party in writing, or by order of the court, any property
(including, but not limited to, real property, cash accounts, stocks,
mutual funds, bank accounts cars and boats) individually or jointly held
by the parties, except in the usual course of business, for customary
and usual household expenses or for reasonable attorney's fees in
connection with this action.
While framed in the negative as a restriction on the parties, Section
236B(2)(b)(1) plainly contemplates the admissibility of a court order
directing the sale pendente lite of real property jointly held by the spouses. The Legislature was presumably aware of Kahn v. Kahn
when it enacted the Automatic Orders in 2009 yet did not exempt
tenancies by the entirety and indeed placed no restriction on the kinds
of estates in real property potentially subject to court-ordered sale
pursuant to Section 236B(2)(b)(1). To construe the Automatic Orders as a
liberation from the constraints of Kahn v. Kahn
would assist the matrimonial court in mitigating the financial
exigencies encountered by families enmeshed in divorce litigation, often
for a period of years, and promote the salutary goals of the Equitable
Distribution Law.
In this case, the mortgage on the marital residence is not being paid
and if matters are allowed simply to take their course a foreclosure
and the loss of whatever equity the parties may have in their home is
inevitable. A sale pendente lite is needed to prevent the ongoing
dissipation of assets and accumulation of unreasonable debt, and to
preserve marital property—the equity in the home—for equitable
distribution. The Court has the authority to determine whether the terms
of a proposed sale are appropriate, to direct the disposition of the
proceeds of sale in the best interest of the parties, and to take steps
to alleviate any hardship resulting from the pre-judgment severance of
the tenancy by the entirety and loss of the marital home.
D. Conclusion
The Court invokes its authority under DRL §236B(2)(b)(1) and orders a
sale of the marital residence based on the circumstances presented and
the needs of the parties. The property shall be listed for sale with a
broker who participates in a Multiple Listing Service, and the parties
shall accept any offer within ten (10%) percent of the asking price.
Both parties shall cooperate with the broker and the house shall be
maintained as ready for sale. The net proceeds of sale, after payment of
the usual and customary expenses and closing costs, shall be escrowed
pending further order of the Court.
In view of Kahn v. Kahn
the Court does not adopt this course of action lightly. However,
inasmuch as the exigencies as they exist militate strongly in favor of a
prompt sale, the Court declines to stay its Decision and Order pending
application, if any, to the Appellate Division.
IT IS SO ORDERED.
[1] It must be stressed from the outset that the Court addresses itself only to the "legal fiction" of the union of person in husband and wife in marriage.
[2]
Although the Loan Modification required an acceptance on or before a
specific date, now passed, the Court was advised that the deadline had
been extended. The Court in any event does not view the issue as moot as
it is readily capable of repetition.
[3]
The moving papers do not explain how the unemployed Defendant, who
owes arrears in child support and maintenance, will be able to pay
$5,441.36 per month, nor is there any explanation why a bank would enter
into a loan agreement with a borrower without apparent means to repay.
The Court declines to speculate, but notes that while the motion has
been sub judice Defendant became employed at an annual salary of
$150,000. He recently submitted a projected net income for 2024 of
$114,139, and projected expenses for 2024 of $106,774 exclusive of
income or property taxes. It remains improbable that he could carry the
proposed mortgage.
[4] Sir William Blackstone cited a 15th century definition of tenancy by the entirety from Sir Thomas Littleton:
[I]f and estate be given to a man and his wife, they are neither
properly joint-tenants, nor tenants in common: for husband and wife
being considered as one person in law, they cannot take the estate by
moieties, but both are seised of the entirety per tout et non per my
[by the whole and not by a share, moiety, or divisible part]; the
consequence of which is, that neither the husband nor the wife can
dispose of any part without the assent of the other, but the whole must
remain to the survivor.
2 William Blackstone, Commentaries on the Laws of England 181 (1765), quoted in Richard R. Powell, The Law of Real Property ¶620 (1991).
[5]
Pursuant to DRL §§ 234 and 236B(5)(f), the court is specifically
authorized to direct the use and occupancy of the marital home pendente lite "without regard to the form of ownership of such property."
[6]
Pursuant to DRL §236B(5)(a, c, d), the court is specifically
authorized to distribute marital property (including the marital home)
equitably between the parties and to provide for the disposition thereof
in the final judgment.
[7] 200 AD3d 44 (1st Dept. 2021).
[8] 57 Misc 3d 1223(A) (Sup. Ct. Queens Co. 2017)."
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