- The Drahos/Barnett formula provides a consistent baseline for determining the community’s interest in a spouse’s separate property.
- The trial court has some flexibility in departing from the formula, but it cannot ignore the effect of a valid disclaimer deed or the reality of the separate property interest.
The parties purchased two properties during the marriage—Leisure Lane and 30th Way. Leisure Lane was purchased entirely with community funds, while 30th Way was purchased using both community funds and Wife’s separate funds. Both properties were titled in Wife’s name only for financing purposes and Husband signed a valid disclaimer deed for both properties.
The trial court applied the tried-and-true Drahos/Barnett formula and awarded the community its contributions reducing the principal balance of the mortgage and a proportionate percentage of the appreciation in value—but nothing for the community funds used for the down payment on the properties before Husband signed the disclaimer deed.
Husband appealed, citing Femiano v. Maust, and the court of appeals affirmed. 248 Ariz. 613 (App. 2020) (calculation of community lien should ignore disclaimer deed and include all community funds used to improve the property). The supreme court granted review.
The Drahos/Barnett formula “is an appropriate starting point for courts to calculate a marital community’s equitable lien on a spouse’s separate property.” The trial court is not bound by any one method, but the Drahos/Barnett formula is “a baseline from which courts can evaluate whether the facts of a specific case warrant a modification of or departure from that formula.”
The supreme court specifically disapproved of the approach in Femiano, noting that it “fails to credit the separate property owner with any increase in value due to simple market appreciation” and “neglect[s] to account for the fact that the owner spouse is still liable for the balance on the loan after dissolution.”
Saba v. Khoury, 516 P.3d 891 (Ariz. 2022).