## Facts

- Wife used $90,000 of her separate funds shortly before marriage to purchase an undeveloped lot; title was taken in joint tenancy with Husband.
- After the July 2005 marriage, the parties built a residence on the lot, contributing separate funds to construction (Wife $67,000; Husband $46,500) and using a loan secured by the property to complete construction and pay related expenses.
- The parties performed substantial labor on the project and used subcontractors only for limited work.
- The property was re-deeded to the parties as married persons holding joint tenancy with right of survivorship.
- The home became ready for occupancy in June 2006; Husband moved out about two months later. Wife petitioned for dissolution in April 2007.
- The family court valued the property at $310,000, found net equity of $216,029 after liens, treated the residence as jointly held marital property, reimbursed Wife $157,000 and Husband $46,500 for separate contributions, and allocated the remaining equity by contribution proportions.
- Husband appealed, arguing the distribution of the marital residence was improperly unequal in Wife’s favor.

## Issues

1. Whether the family court abused its discretion by entering a property division that, as structured, produced an inequitable distribution of the jointly titled marital residence.
2. Whether the family court misapplied Arizona’s equitable-division requirement and the guidance of *Toth* when it reimbursed separate contributions in a way that largely exhausted the equity before any meaningful marital division.

## Decision

- The court of appeals vacated the dissolution decree in part and remanded for further proceedings concerning the division of the marital residence and related reimbursements.
- The court agreed the residence was properly classified as jointly held marital property subject to equitable division under A.R.S. § 25-318.
- The court held the family court misapplied the controlling equitable-division standard by effectively treating separate contributions as automatically and fully reimbursable ahead of an equitable division of the jointly titled property.
- The court directed reconsideration of the residence division under the correct understanding that deviations from an equal division must be supported by facts showing the result is equitable.

## Legal Principles

- Jointly titled real property held by spouses is generally treated as marital property subject to equitable division in dissolution proceedings under A.R.S. § 25-318.
- Equitable division ordinarily requires “substantial equality,” though not necessarily a mechanical 50/50 split, and may consider factors such as the source of acquisition funds and the length of the marriage.
- A spouse’s use of separate funds to acquire or improve jointly titled property may support an unequal division in appropriate circumstances, but does not justify reimbursement arrangements that effectively negate the marital character of the jointly held asset without adequate justification.
- A property division based on a legal misinterpretation of the equitable-division standard constitutes an abuse of discretion and warrants vacatur and remand.

## Conclusion

The court of appeals held that while the marital residence was correctly treated as jointly held marital property, the reimbursement-first distribution scheme misapplied Arizona’s equitable-division requirement, so the residence division and related reimbursements were vacated and remanded for reconsideration consistent with substantial-equality principles.


In re Marriage of Inboden, 223 Ariz. 542, 225 P.3d 599 (Ariz. Ct. App. 2010)