A.C. (Wife) and N.C. (Husband) signed a prenuptial agreement–also referred to as a martial agreement–before they were married in 2010. The agreement identified their separate property–the property that each had acquired before their marriage–which included some land Husband owned that was referred to as the Shoshone property. According to the prenuptial agreement, the Shoshone property would remain as Husband’s separate property in the event he and Wife later divorced.

About a month after they were married, Husband and Wife decided to buy some real estate together. Husband pledged his Shoshone property as collateral for a home equity line of credit, which they used as a down payment and to remodel the property they wanted to buy, which was referred to as the Pinyon property.

Some time later, Husband and Wife decided to end their marriage, and a dissolution of marriage (divorce) case was filed in a Colorado district court. Because they could not agree on how their marital property should be divided, Husband and Wife had to appear before a judge at a permanent orders hearing so the judge could make the decision.

After hearing the parties’ evidence, the district court judge ruled that Husband’s Shoshone property became marital property when Husband pledged it as collateral to secure a marital loan.

Husband appealed the district court judge’s decision to the Colorado Court of Appeals.

Continue Reading Pledging Separate Property as Collateral to Purchase a Marital Asset Does Not Convert the Separate Property Into Marital Property