Real Property Owned by One Spouse with Third Party

A recent decision by the Maryland Court of Special Appeals establishes a new precedent useful to Maryland Divorce Attorneys in effectively representing clients in the disposition of real property.

In Triantis vs. Triantis, the parties separated after being married for 29 years. They owned real estate, some titled jointly, some separately and some with a third party. They stipulated in their separation agreement that all real estate was to be considered jointly owned, regardless of what was shown on the documents in the land records. They also agreed to reasonable efforts to sell the properties.

If the test is not met, the spouse who is not owner of record may be entitled to relief under the Marital Property Act.

One of the parcels was 40 acres that Husband owned jointly with a third party. Four years after the separation agreement was recorded in the land records, the parcel remained unsold. Wife filed a lawsuit in the Circuit for Montgomery County, requesting that the land be sold “in lieu of partition”. The Circuit Court judge rejected her petition without even allowing her a trial on the grounds that she did not have legal title to the land, meaning that her former Husband and a third party, not Wife were on the deed.

On appeal, the decision was reversed. The Court of Special Appeals ruled that if wife held a concurrent equitable interest in the land that was fully vested she would be entitled to an order of sale pursuant to section 14-107 of the Real Property Article. The Court sent the case back to the trial judge to determine if wife’s equitable interest was fully vested.

This opinion illustrates how complex property disposition can become in divorce. It requires a three step analysis in cases involving property owned by one spouse with a third party: (1) if spouse does not hold record title, does that spouse hold a concurrent equitable interest, (2) is that equitable interest of a type that authorizes an order of partition under section 14-107 and (3) is that equitable interest fully vested? If so, spouse is entitled to an order of sale.

If the three part test is not met, the spouse who is not record owner may be entitled to other relief under the Marital Property Act but would not be entitled to force the sale of the property.