Litigation

Where a loan is taken during a marriage to build a marital residence on the separate property of one spouse, the loan may be found to be a marital debt, and the spouse who does not continue to reside in the residence after the marriage is entitled to reimbursement of one-half the net value of the asset at the time of the divorce rather than reimbursement for the amount of principal paid toward the loan. McGee v. McGee, 2004 CA 0288, Court of Appeal of Louisiana, First Circuit, March 24, 2005.

The parties were married in 1976 and divorced in 2002. During the marriage, the parties secured a loan to build a residence on a tract of land obtained by the former husband prior to the parties' marriage. The loan was secured by the property on which the house was built. After the divorce, the former husband petitioned for the judicial partition of the marital estate. The trial court declared, inter alia, that the land and the residence — and the debt — were the separate property of the former husband and awarded the former wife one-half of all of the community funds paid toward the principal of the loan. The former husband appealed, and the appellate court affirmed in part and reversed in part. It held that the loan was not the husband's debt, but a marital debt, because it was secured by both parties to build a residence in which the parties resided during their marriage. Thus, it held that, as a community obligation, the wife owed the husband one-half of the balance of the loan at the time of the partition. However, it also ruled that the husband must reimburse the wife for the community funds used to build the house on his separate property.