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Rockland & Westchester County Divorce Lawyer > Blog > Divorce > Equitable Distribution of Rental Properties Creates Confusion in New York Divorce

Equitable Distribution of Rental Properties Creates Confusion in New York Divorce


In the case of Raposo v. Raposa, the trial court managed the equitable distribution of certain rental properties that were part of the marital estate. Indeed, the marital estate had accrued considerable value during the 31-year marriage. During the trial, the principal issue that the court was left to consider was the distribution of several rental properties owned and operated primarily by the husband. In the judgment, the Supreme Court awarded the plaintiff approximately 45% of the total net equity value of the rental properties owned by the parties. When dividing the rental properties, the court determined that each party would “be responsible for the security deposits owed for their respective rental properties.”

The defendant appealed from the judgment of divorce arguing that the award of rental properties to the plaintiff was an “improvident exercise of discretion” and failed to account for the tax consequences of that transfer. The plaintiff cross-appealed the judgment arguing that the defendant should have been ordered to transfer to her the security deposits that the defendant collected from tenants of rental properties that now belonged to her.

In making such decisions regarding the equitable distribution of the marital estate, a trial court has broad discretion in making such an award. Unless a plaintiff can establish that the trial court abused its discretion, any determination made by the trial court “shall not be disturbed.”

In the case mentioned above, the trial court moved to award the plaintiff the rental properties in kind as opposed to awarding her proceeds from the rental properties. The appeals court determined that this ruling was not an “improvident exercise of discretion” but rather firmly within the purview of the court’s authority.

The defendant, of course, preferred to retain ownership and control of the rental properties. However, he failed to establish that an in-kind distribution was unnecessary, impracticable, or burdensome. On the other hand, the appeals court did state that the trial court should have directed that both parties equally share any transfer tax liability resulting from the transfers of the rental properties.

On the plaintiff’s motion, the court found that she correctly argued that the Supreme Court should have directed the defendant to transfer any security deposits paid by tenants on properties that were now in her possession.

Analysis of the case

 This case outlines some of the complexities involved with equitably distributing marital assets for high-asset couples. In this case, the defendant owned several rental properties that were subject to equitable distribution by the courts. The courts decided to split the rental properties by awarding the plaintiff equity in 45% of the defendant’s total holdings. But this triggered other issues such as the cost of transferring the properties, tax liabilities, and what was to happen to security deposits that were paid by tenants occupying those properties.

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The Law Office of Robert S. Sunshine represents the interests of Rockland and Westchester County residents pursuing a divorce in New York State. Call our Westchester County family lawyers today to schedule an appointment, and we can begin discussing your next moves right away.



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