House keys on top of a mortgage document.

Court Cannot Issue Post-Decree Order to Modify Property Settlement

After a divorce, can the court later issue an order for a spouse to refinance the mortgage on a residence awarded to her? Some orders can be modified after a divorce – we have a whole section of the Colorado Family Law Guide dedicated to post-decree modification of family law orders. In short, orders pertaining to children or support can be modified when circumstances change, but a trial court’s jurisdiction to modify a property settlement is much more limited.

At a fully-contested divorce hearing, there are a lot of moving parts, and unless the spouse has an attorney keeping track of all of the issues, something important may slip through the cracks. One thing which spouses often overlook are what happens after the residence is awarded to one spouse. Should that spouse be required to refinance the mortgage?

It’s not uncommon for a marital residence to be jointly-titled and have a joint mortgage. And while the family law judge can order one spouse to transfer title to the property over to the other spouse, the judge cannot order the mortgage company to take the other spouse off the mortgage. This creates problems for the other spouse who was not awarded the residence – he/she will be vulnerable for years to come should the spouse with the home miss a payment, and even if all payments are made timely, his/her credit may be tied up, making it more difficult to purchase a new house.

Refinance the residence mortgage

This makes it imperative for the other spouse, at the time of the dissolution of marriage hearing to request a deadline for the spouse with the house to refinance the mortgage or otherwise remove his name from the residence mortgage, even by sale if a refi is not possible. In most cases, upon request a court will order the spouse with the home to refinance it within 3-6 months, though on rare occasions I have seen up to a year when there are children, and the spouse with the house needs time to refi.

When representing a spouse who was awarded the residence, I have successfully fought attempts years after the divorce for one spouse to force the other to refinance the mortgage, when no refi was actually ordered at the divorce hearing. These arguments were based upon the general body of law prohibiting courts from modifying a property settlement after a hearing. But now the Colorado Court of Appeals has issued a ruling specific to the issue of a post-decree order to refinance the mortgage on the former marital residence.

Court of Appeals – No Post-Decree Order to Refinance the Mortgage

In Kuchta,1In re: Marriage of Kuchta (Colo.App. 2020) (Unpublished Decision). the trial court awarded the marital residence to the wife, who was living there with the parties’ children, and ordered her to pay the mortgage each month. The husband had the option of obtaining an appraisal within 60 days, and if it appraised over $235K, the residence would instead be sold and the equity applied towards debt.

The husband did not timely obtain an appraisal. But he did file a series of motions, including contempt against the wife for non-payment, and motions seeking “reconsideration and clarification” of the orders re: the residence, including asking for his monthly support payments to go towards the mortgage, for the home to be sold, for an extension of time to appraise the residence, etc.

The trial court denied the husband’s contempt and first two motions for reconsideration, finding it had no jurisdiction to grant the relief. Husband filed a third motion, more than seven months after the permanent orders were entered, asking the court to give the wife a 90-day deadline to remove his name from the mortgage, by refinance or sale if necessary, and until then, to deduct the mortgage from his support payments to the wife. Note that at the time of the hearing, all of these would be measures the trial judge could consider, but the problem is that once the permanent orders entered, obtaining an order to refinance a mortgage, for example, is much more difficult.

But for the husband, the third time was a charm – this time when the wife failed to respond, the trial court granted his motion by default, and signed the husband’s proposed order without modification. The wife appealed, and the Colorado Court of Appeals reversed.

The Court first noted the absence of authority to modify a property settlement seven months after the decree issued:

“As in his two previous postjudgment motions, husband cited no legal authority in his third motion that would entitle him to relief from the final permanent orders more than seven months after they were entered. Nor did the district court cite legal authority or make findings as to its basis for granting husband such relief.

Contrary to husband’s argument, the court does not have “inherent authority” to alter property division orders post-decree. Rather such orders are modifiable only on conditions allowing a final judgment to be reopened, meaning under C.R.C.P. 59 or C.R.C.P. 60.”

Kuchta.2In re: Marriage of Kuchta, ¶¶ 14-15 (Colo.App. 2020) (Unpublished Decision).

Order to Refinance the Mortgage was Amendment of Property Division

The Court found that seeking to impose, after-the-fact, an order to refinance the mortgage was seeking to amend the permanent orders:

“Specifically, husband asked to change the property division orders relating to the marital home, which is essentially the same relief he sought in his two prior motions — the first of which the court denied as an untimely Rule 59 motion. Rather than wife being awarded the marital home unless he obtained an appraisal within sixty days, husband asked that the home be sold unless wife can refinance it within ninety days. These are unquestionably very different terms and thus husband’s motion constitutes a request to amend the permanent orders terms under Rule 59(a)(4).”

Kuchta.3In re: Marriage of Kuchta, ¶ 16 (Colo.App. 2020) (Unpublished Decision).

14-Day Deadline for Relief from Judgment to Modify Property Division

Colo. R. Civ. P. 59(a) provides for a 14-day deadline to file a motion to amend a judgment, and husband’s failure to file his motion within 14 days was fatal:

“Strict compliance with the fourteen-day deadline is required, and a court exceeds its jurisdiction if it attempts to grant relief outside of the rule’s timeline. It is undisputed that husband did not meet the fourteen-day deadline as to any of his three postjudgment motions, nor did he request an extension within that time. See C.R.C.P. 59(a). Thus, the district court lacked jurisdiction to consider his third postjudgment motion.”

Kuchta.4In re: Marriage of Kuchta, ¶ 17 (Colo.App. 2020) (Unpublished Decision) (Cleaned Up).

The court further found that the husband’s motion did not meet the requirements to set aside the judgment under Colo. R. Civ. P. 60(b), as he did not allege any specific basis for relief under the rule (moreover, most provisions of that rule have a 182-day deadline, which the husband also missed).

The takeaway? If you make a mistake at trial and don’t request all of the orders you need at that time, you cannot count on the trial court “cleaning things up” after-the-fact and granting relief by adding additional terms to the property division that were not originally ordered.

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Refinance the Mortgage

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