The Lawletter Vol 47 No 3
A recent decision by the District of Columbia Court of Appeals indicates that since a judgment for the debt of only one spouse does not attach to property held by the judgment debtor and his or her spouse as tenants-by-the-entireties, the nondebtor spouse takes the subject property free from a judgment lien against the debtor spouse's property even if the spouses’ divorce and the former couple's divorce decree and property settlement agreement calls for the debtor spouse to transfer to the nondebtor spouse his or her share of the couple's tenancy-by-the-entities property. Blount v. Padgett, 261 A.3d 200 (D.C. 2021). In Blount, the court relied upon the rule that “[a]lthough the characteristics of a tenancy by the entireties include ‘an inability of one spouse to alienate his interest,’ Morrison [v. Potter], 764 A.2d [234,] 236 [(D.C. 2000)], one spouse can voluntarily ‘relinquish [and convey] his or her interest to the other.’ Clark [ v. Clark], 644 A.2d [449,] 452 [(D.C. 1994)]. Id. at 203. The Blount court also cited the District of Columbia rule, which is not followed in all jurisdictions, that "a lien that cannot attach to property held as tenants by the entireties during a debtor's marriage will not necessarily attach to the property upon the debtor's divorce." Id. at 204. Finally, the Blount court ruled that the transfer by the husband to his wife of his tenancy-by-the-entireties interest in property, pursuant to the parties' divorce decree and property settlement agreement, did not qualify as a "fraudulent conveyance" by the debtor spouse to his nondebtor spouse. Id. at 207.
Although the issue did not arise in Blount, one wonders if the same result would obtain in a case where the holder of a judgment against one spouse can show that the nondebtor spouse had directly or indirectly benefited from the debt or obligation that was incurred by the debtor spouse. In Blount, the judgment in question was against the husband for his law firm's legal malpractice, which suggests that the nondebtor spouse did not benefit directly or indirectly from the husband's debt.
An excellent summary of the Blount decision can be found in 36 Keeping Current—Property, Probate and Property 20 (ABA Mar./Apr. 2022), edited by Prof. Shelby D. Green, Elisabeth Haub School of Law, Pace University, White Plains, NY 10603, firstname.lastname@example.org; contributor Prof. Darryl C. Wilson.