New Case Law: Owning real property with parents

It’s not uncommon for married couples to own property in conjunction with the husband or wife’s parents. Sometimes the property is titled in the name of the parents and the child going through the divorce, or sometimes it’s titled in the name of the parents and both the child and his or her spouse. These entanglements can complicate property division when the parties divorce.
Usually the issue is whether the property should be considered a marital asset — something the parties presumptively divide equally — or whether it should be considered the sole property of one of the divorcing parties (and would not be divided, but would go to one party).

Even when only one party’s name appears on the title with his or her parents, it isn’t necessarily an easy call for the court. The court typically hears evidence about what the parents’ motivation was for placing the child on the title. (Reasons could be that the parent wants the child to have a right of survivorship, so the property won’t pass through the probate estate; as a gift to the child; as a way of compensating the child for some other reason; or as a gift to the couple.) The court’s determination is based on finding who is the most credible, or who the court believes is telling the truth.

In Kirkendall and Kirkendall, 211 Or App ___, ___ P3d ___ (2007), the Court of Appeals heard a case involving these issues. In Kirkendall, the wife’s mother had placed her on the title to some real property, and the motivation for that placement became an issue in the dissolution proceeding. The wife argued she’d placed her on the title so that it would be easy for the wife to care for her stepfather after her mother died; the husband argued the real reason was because there was a plan to remodel the property for both couples to live on.

The trial court sided with the husband and held the wife’s interest in the property was a marital asset that should be divided.

On appeal, the Court of Appeals was unwilling to reverse the trial court’s determination because it was based on a credibility finding. (The court also refused to reverse the trial court’s findings regarding a contribution to the property by the wife’s parents, for the same reasons.)

This case is important for a couple of reasons: first, it points out ways that owning property jointly with other parties, even family, can complicate a dissolution proceeding, particularly when there’s no written record of why the parties have decided to own property jointly. Also, it illustrates the Court of Appeals’ unwillingness to reverse a trial court’s ruling based on credibility of witnesses.

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