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Closing costs from house sale not defined as joint debt.

Byline: Virginia Lawyers Weekly

Where the parties' agreements did not designate how closing costs from the sale of marital assets should be treated, the court did not err in allocating closing costs.


Prior to marriage, the parties entered into a premarital agreement. Among other things, the premarital agreement addresses the property and debts of the parties.

Once married, the parties decided to sell husband's separate property to purchase a new marital home to be titled jointly. In order to avoid husband losing his separate property interest as provided in the premarital agreement, the parties entered into a second agreement (the "marital agreement"). The purpose of the marital agreement was to allow the parties to jointly title the home and "allow for a percentage of the new home to be determined as separate property." Where one party contributed separate property in partial purchase of a new marital home, the marital agreement states that "the amount of any such payment will be a separate-property interest in the asset, which will be a percentage of the asset's value, equal to the percentage of the asset's original purchase price that the payment represents."

The parties purchased the marital home for $1,189,000. Husband contributed $272,351.75 of his separate property. After husband's contribution and a credit from the sellers, the parties jointly obtained a mortgage for the remaining $915,000.

Upon their separation, the parties sold the marital home for $1,130,000. The proceeds after the mortgage balance and closing costs had been deducted were $263,741.06. The parties agree that husband was entitled to 69.27 percent as his separate share and 15.365 percent as his portion of the marital share, for a total of 84.635 percent. Wife's marital share was 15.365 percent. The parties disagreed as to how the closing costs should be allocated. Husband argued the closing costs should be treated as joint debts and evenly divided between the parties.

The circuit court rejected husband's argument and determined that under the three agreements, the asset's value, or the amount to be allocated between the parties, equals the amount after all of the costs (both mortgage and closing) are deducted from the sale price. Husband filed this appeal.


The parties' agreements do not expressly set out how closing costs should be allocated between the parties upon the sale of the marital asset. Husband argues that the closing costs should be treated as a joint debt and divided equally between the parties. But husband is asking the court to adopt an interpretation inconsistent with the express language of the agreements. The agreements do not define closing costs as a debt, nor do they provide a definition of debt. Husband simply assumes that closing costs are debts without citing any authority for the proposition.

Paragraph 8(A) of the marital settlement agreement, entered into after the residence was sold, specifically provides, "The parties are not jointly obligated to pay any debts." Moreover, the marital settlement agreement sets out $263,741.06 as the sale proceeds and reserved the "issue of how these sale proceeds shall be divided." It contains no reservation of the issue of allocating closing costs, which had already been paid. Thus, the language used in the marital settlement agreement specifically demonstrates, first, that the parties agreed that no joint debts existed, and second, the parties' intent to treat the closing costs as something other than a joint debt.

The circuit court's interpretation of the "asset's value" as referring to the proceeds from the sale after all of the costs have been deducted is consistent with the language in the agreements. Therefore, we cannot say the circuit court erred in allocating the closing costs as it did.


Ayers v. Ayers, Record No. 0068-18-4, Oct. 2, 2018. CAV (Atlee), from Fairfax Cir. Ct. (Shannon). Phillip B. Leiser for Appellant; Jenna M. Maresco for Appellee. VLW No. 018-7-241, 5 pp.

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Title Annotation:Ayers v. Ayers, Virginia Court of Appeals
Publication:Virginia Lawyers Weekly
Date:Oct 28, 2018
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