MARTIN K. DONALDSON, APPELLANT,
v.
MICHELE M. DONALDSON, APPELLEE
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In this marriage dissolution appeal, the court addressed the proper application of the Landay formula for determining a spouse's special equity in tenancy by the entirety property. The trial court erred by applying the formula to excess proceeds of sale rather than the total sale proceeds, which resulted in the husband receiving less than his initial contribution to the marital home.
The Landay formula must be applied to the total sale proceeds (after deduction of reasonable sale expenses), not to excess proceeds. Under this correct application, the husband's special equity is calculated against the full property value, and he receives his share of equity after deducting his proportionate share of the mortgage debt.
[1] A spouse's special equity in tenancy by the entirety property, in addition to their automatic one-half share, is equal to one-half the ratio of their initial contribution…
[2] The Landay formula for calculating a spouse's special equity in marital home proceeds must be applied to the total proceeds of sale, not merely the excess proceeds after…
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Join FLexlaw to unlock all legal intelligence“the formula must be applied to the total proceeds of sale, or total value of the property, rather than the excess proceeds”
Establishes the correct legal standard for applying the Landay formula to determine special equity in marital property
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Join FLexlaw to unlock all legal intelligenceThe parties purchased their marital home as tenants by the entirety for $186,000, with the husband contributing $29,215 from funds outside the marriag…
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SCHEB, Judge.
This appeal arises from a final judgment of dissolution of marriage. Martin Donaldson, the former husband, challenges certain dispositions of property and an award of attorney’s fees to Michele Donaldson, the former wife. We find merit to only one of the four points he raises. We think he is correct in his contention that the trial court erred in applying the formula set forth in Landay v. Landay, 429 So. 2d 1197 (Fla.1983), in determining how the proceeds from the prospective sale of the marital home must be distributed.
Initially, when the parties bought their marital home as tenants by the entirety, the husband contributed $29,215 from funds outside the marriage to the purchase price of $186,000. The home is currently encumbered by a mortgage debt of approximately $156,000.
Using the Landay formula, the trial court awarded the husband a special equity of 8% over and above his one-half interest in the marital home. Since the parties had requested a partition, the court ruled the husband’s 58% interest would be applied to the “excess proceeds of sale.”
In Landay the supreme court established a formula to determine the extent of a spouse’s special equity in tenancy by the entirety property. The court said that, in addition to the contributing spouse’s automatic one-half share, that spouse acquires a special equity equal to one-half the ratio which that spouse’s initial contribution to the property bears to the entire consideration. Landay, 429 So. 2d at 1200.
Under the trial judge’s interpretation of this formula, the husband posits that, if the home sold for $200,000, the “excess proceeds of the sale” would be $44,000, i.e., the sale price less that $156,000 mortgage encumbrance. Thus, the husband would only be entitled to receive .58 X $44,000, or $25,520. He correctly points out that this application of the formula would result in his receiving less than his initial investment of $29,215.
We think the trial judge’s application of Landay is incorrect. Rather, we believe that the formula must be applied to the total proceeds of sale, or total value of the property, rather than the excess proceeds. Of course, the total proceeds of sale are those proceeds after deduction of necessary and reasonable expenses incident to sale. Thus, the correct application of the formula to the parties’ property would produce the following result:
Sale Price — $200,000
Husband’s Share:
.58 X $200,000 $116,000
Less Husband’s Share of Mortgage Debt 78,000
Husband’s Equity $ 88,000
Accordingly, we reverse the part of the final judgment which applies the husband’s special equity in the marital home to the “excess proceeds of sale.” We remand for proceedings consistent with this opinion. In all other respects, we affirm the final judgment.
GRIMES, A.C.J., and HALL, J., concur.
Cases With Similar Vibessemantic neighbors from the corpus
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Romano v. Romano, 632 So. 2d 207 (Fla. 4th DCA 1994)…e’s special equity is carved out of the net proceeds of sale, after the mortgage is paid off, and applied the Landay formula to the total proceeds from the sale. Griffiths v. Griffiths, 563 So. 2d 773, 775 (Fla. 3d DCA 1990); Donaldson v. Donaldson, 481 So. 2d 101, 102 (Fla. 2d DCA 1986); see also Cochran v. Cochran, 560 So. 2d 269, 270 (Fla. 5th DCA 1990) (appearing to follow Donaldson and Griffiths when the court calculated the wife’s share of special equity based on the Landay formula, “after equal allocat…
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Griffiths v. Griffiths, 563 So. 2d 773 (Fla. 3d DCA 1990)…ing rationale is that the spouse contributing the special equity should also receive the related appreciation thereon and not merely a return of the original special equity.2 The correct approach is, in our view, reflected in Donaldson v. Donaldson, 481 So. 2d 101, 102 (Fla. 2d DCA 1986).3 We assume for purposes of this discussion that the acquisition cost of the marital home was $208,740.16 including costs of land and construction.4 We value the husband’s contribution at $26,021 and use the fáir market valu…
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Hess v. Hess, 654 So. 2d 199 (Fla. 4th DCA 1995)…est. Her interest should be determined by calculating her share of the fair market value of the home before reducing the share by half the amount of the mortgage. See Griffiths v. Griffiths, 563 So. 2d 773 (Fla. 3d DCA 1990); Donaldson v. Donaldson, 481 So. 2d 101, 102 (Fla. 2d DCA 1986).2 In all other respects, the final judgment is affirmed. Affirmed in part; reversed in part and remanded. GLICKSTEIN and SHAHOOD, JJ., and GRIFFIN, JACQUELINE, Associate Judge, concur. . Landay v. Landay, 429 So. 2d 1197 (…
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- Sumner Landay v. Landay, 429 So. 2d 1197 (Fla. 1983)