Last year, we published a post entitled He Who Hesitates (To Sell Former Marital Home) May Have Lost.  However, the Supreme Court disagreed in Sachau v. Sachau decided May 11, 2011.

In Sachau, the marital home was supposed to be sold on a triggering event, the emancipation of the youngest child, which in this case was in 1984.  The house wasn’t sold then but in 1990, the wife began making inconsistent payments at inconsistent intervals to the husband through 2004 totalling almost $80000.  When the husband became unable to support himself, he filed a motion to compel the sale of the house in 2006.

Without getting into the legal steps it took to get to a hearing, the trial judge ultimately concluded that there was no agreement between the parties in respect of the valuation date and that the 1984 value of the home was $120,000 and that was the valued to be used.  As such, the husband’s share was filed at  $144,915.62 (which included interest) and the wife’s share was $417,472.64. The judge further determined that the wife would be credited for payments made. Moreover, the judge noted that the equities were in parity and that “the passage of time ha[d] not caused a change in position to the
detriment of [Barbara].” The husband appealed, and as noted in our prior post, the Appellate Division affirmed.

The Supreme Court disagreed and reversed, noting that it’s decision in Pacifico v. Pacifico was controlling.  Therein, the Supreme Court, ".. further declared that “where the sale of a marital asset
is to abide a future event, for example the coming of age of a child, and no alternative is provided, current market value as of the time of the triggering event is presumed.”

In Sachau, since the parties’ agreement provided a triggering event, but not what happens if the parties did not abide the triggering event, it was up to the court to supply the omitted term.  Specifically, the Supreme Court disagreed that the value as of the date of the triggering event should be used if the triggering event did not result in the sale of the house.  The Supreme Court stated, "That is an incorrect view of Pacifico which only presumes value as of the trigger if the sale takes place at
that time. Here, because there was no agreement to the contrary, the house should have been valued as of the date of the sale."

This makes sense because the law is very clear that the valuation date for a passive asset is the date of distribution of the asset.  Moreover, since the husband here did not have the benefit of his share of the asset, why should the other spouse, who actually enjoyed the use of the house, also get all of the passive appreciation?  In fact, given the delay and the wife’s use, should she not be required to compensate the husband additionally for her use of the asset, especially since she will equally share in the passive increase in value.