Arizona Court of Appeals Division One Holds That Upon Dissolution of a Marriage, an Unequal Division of Jointly Held Property Cannot be Made Solely to Reimburse Each Spouse for Separate Funds That Were Used to Purchase the Jointly Held Property.

Shortly before her marriage, wife purchased an undeveloped lot in Yuma, Arizona with her separate funds, and she and her future husband took title to the lot as joint tenants.  Following their marriage, husband and wife built a house on the lot and transferred the lot and house to themselves as married persons as joint tenants with rights of survivorship.  Each spouse contributed financially to the construction of the house from their separate funds.  The couple also obtained a loan against the property.  Within months of completing the house, husband moved out and the couple later petitioned for dissolution of their marriage.

The family court concluded that the house was jointly held marital property subject to equitable division, and after deducting the amount of the lien from the value of the house, determined the parties were entitled to reimbursement for their separate financial contributions.  The court awarded possession of the house to wife and ordered her to make an equalization payment to husband.  Husband timely appealed. 

The Arizona Appeals Court vacated the portion of the dissolution decree related to the division of property held in joint tenancy and remanded the action for further proceedings.  A.R.S. § 25-318(A) governs the division of marital property upon dissolution and provides that each spouse is to be assigned his or her separate property and all jointly held property is to be divided equitably.  The family court has broad discretion in allocating the property but an unequal division of jointly-held property cannot solely be made to reimburse each spouse for separate funds that were used to purchase the jointly held property. The Court reasoned that the family court’s order indicates that the property division was based solely on the relative contributions of separate property made toward the purchase of the jointly held property.  Thus, the Court found that the family court abused its discretion.  The Court explained that in making an equitable division of community property upon dissolution of marriage, the family court should consider all factors that bear on the equities of the division.     

Judge Brown authored the opinion, Judges Hall and Portley concurred.