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Trohalides v. Machat

August 27, 2010


On appeal from Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. C-41-08.

Per curiam.


Submitted August 17, 2010

Before Judges Lihotz and Baxter.

In this partition action, defendant Peter Machat appeals from a Chancery Division judgment that, among other things, ordered he transfer all right, title and interest in one residence to plaintiff Karen Trohalides and granted plaintiff an equitable interest in a second residence titled solely to him. Defendant argues the trial court erred by applying equitable distribution rather than partition principles when fixing the parties' respective interests in the realty. Plaintiff cross-appeals, challenging another provision of the judgment retroactively offsetting her awarded interest in the realty titled to defendant by her share of unpaid carrying charges. We affirm.

Plaintiff and defendant met in 1999, when they became line-dancing partners. Shortly thereafter, they fell in love and began "a very romantic, intimate relationship[.]" The parties decided to live together. As defendant was a home improvement contractor, the two agreed to look for a single family "handyman special." They located a home on Clayton Avenue, Monroe Township (Clayton property), which fit their needs.

The contract price of the Clayton property was $150,000. At the November 27, 2000 closing, plaintiff took sole title (1) using a $10,000 down payment provided by defendant, half of which plaintiff maintained was a birthday gift and the other half she labeled a loan, (2) executing a $130,100 loan secured by a purchase money mortgage, and (3) contributing her separate funds to complete the purchase. Plaintiff stated the mortgage was in her name "because it was [her] home" and, because she was a first-time home buyer, she qualified for a better mortgage interest rate. Defendant concurs with the latter statement and asserts plaintiff had a better credit rating than he. Also, defendant maintains plaintiff did not want to jeopardize her alimony payments, which could cease if the parties owned the home together.

At closing, the parties executed an agreement obligating them to equally contribute to the ongoing carrying charges of the Clayton property and stating that "[u]pon the sale of the aforementioned property, the net proceeds shall be divided equally between the parties." Defendant immediately moved into the Clayton property and began extensive renovations and repairs. He testified the parties had agreed plaintiff would pay for the renovation materials and complete the repairs, then plaintiff would compensate him for his labor. Plaintiff moved into the residence approximately two months later.

In July 2003, the parties' relationship became strained. Following a dispute and brief separation, the parties signed a "Reconciliation Agreement" (reconciliation agreement) dated July 10, 2003, which stated:

After a 48 hour separation [the parties] have agreed to reconcile and resume living at [the Clayton property]. We have both jointly financially paid and maintained the above residence equally together to date. This agreement is written to confirm an initial agreement on the day of the purchase of this house. We agree within 90 days we will define the original purchase agreement with an attorney.

During separation, defendant testified the parties "talked about [him] being compensated [for the labor] from the equity of the house, the equity that [he] built into [Clayton]." He asserts the final clause in the reconciliation agreement addressed the parties' intent "to add that [compensation] language to the original purchase agreement." Additionally, he claims the anticipated agreement "was supposed to include that [he] was half owner of the house even though [he] wasn't on the deed."*fn1

Defendant learned plaintiff had made withdrawals, using a home-equity line of credit secured by the Clayton property, to pay her son's college costs and to purchase an automobile. When confronted, plaintiff agreed to make an equivalent withdrawal of funds, which she gave to defendant.

In March 2005, plaintiff refinanced the Clayton property. She also transferred title to herself and defendant as tenants in common. As part of the refinance, the parties withdrew an additional $54,942.29 from the equity of the Clayton property. Plaintiff endorsed the check to defendant, who deposited the funds into his personal checking account.

Plaintiff contends this money was designated for defendant's newly formed business to purchase realty, renovate the structure, "then re-sell[] the home for a profit." She testified she endorsed the check so the funds "would be readily available to [] [d]efendant when a house was located, ensuring he could act quickly to purchase it." On the other hand, defendant asserts "[h]e understood that the payment was compensation for his [past] services" and he suggests plaintiff's ...

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