Refinancing, even multiple refinancings, will not necessarily preclude tracing money from a present asset back through previous house purchases to an original separate-property contribution several houses back, the Court of Appeals explained in Wiese v. Wiese, ___ Va. App. ___, ___ S.E.2d ___, 20 VLW 376 (8/23/05).
Nor did it matter that after 13 years of living in the last house and a third refinancing, the parties equally split $32,896.93 refinancing “proceeds,” as though they were marital property. The husband in this case did provide a contribution of at least $35,000 from the sale of his separate-property townhouse at the beginning of the marriage which was parlayed into a new house and then a replacement of that one. The parties had contributed equally to the mortgage debt retirement and renovations and repairs of these houses. The trial judge considered the equity in the last house all marital, though he awarded the husband 55% of the equity in it simply as a recognition of his contribution. The Court of Appeals held that that was all wrong, because there was more than a contribution to marital property involved here: the uncompromised-separate-property character of that original property townhouse and of the net proceeds of its sale is a matter of classification, not just the recognition of factors and the doing of equity. In fact, there was no real difficulty in proving the tracing. The wife had not disputed the original source of funds, and the husband showed documentary proof of the wire transfers he had used to put the separate-property money toward the down payment on the first marital-property house. The wife, on the other hand, did not produce any evidence to show that her monetary contributions or her personal efforts had caused increases in the value of the separate-property townhouse or the other houses (aside from the equal contributions toward mortgage payment and renovation and repairs). Nor did she present any evidence of “gift.” There was no evidence of delivery, nor of donative intent. It would take a lot more than this, the Court of Appeals explains, to show that refinancing transmuted a separate property fund. It does not constitute a transmutation per se. The Court remanded to the trial court for an equitable distribution following the Brandenburg method or some similar analysis. As for remedies, the Court of Appeals did reject husband’s argument that it was wrong for the trial court to give the wife a right of first refusal to buy out the former marital home, since she lived there, having primary custody of the children in the only house they had ever known.