Considering Mortgage Payment in Calculating Permanent Alimony

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Alexander Caballero

(Alex Caballero of Sessums Black Caballero Ficarrotta, Tampa)

The Florida Supreme Court has explicitly ruled, if a spouse requests permanent alimony, which includes an amount to be saved, the amount requested for savings should be denied. See Mallard v. Mallard, 771 So. 2d 1138 (Fla. 2000). The law is clear that there is no “savings” alimony. However, in determining permanent alimony we typically consider a spouse’s housing need without analysis as to whether the pay down of the principal of the mortgage is inappropriate savings alimony.

In determining permanent alimony a court looks at a spouse’s need, which typically includes expenses for a home. When a spouse is keeping the former marital residence following a final judgment, and even in some cases when the spouse is not, the amount of the mortgage payments is typically and automatically included as part of a spouse’s lifestyle need in calculating the amount of alimony. Little thought is given to this “need”. But this expense needs to be critically examined.

The first issue to examine is whether the spouse seeking alimony is keeping the former marital home. If the spouse is not keeping the marital home, the court should not automatically assume the expenses associated with the former marital home are part of the spouse’s future need in calculating alimony. See Suit v. Suit, 48 So. 3d 195 (Fla. 2d DCA 2010).

If the spouse seeking alimony is keeping the former marital home, the type of mortgage associated with the home needs to be examined. If the mortgage is an interest only loan, then the issue is easy as there is no principal pay down. However, if the mortgage is a more conventional mortgage with principal and interest paid over a period of years, such as 15 or 30 years, an important issue arises as to whether the principal pay down of the mortgage rises to the level of a “savings” component prohibited by Mallard. The Florida Supreme Court made clear the, “current necessary support rather than the accumulation of capital is the purpose of permanent periodic alimony.” See Mallard v. Mallard, 771 So. 2d 1138 (Fla. 2000), citing Rosen v. Rosen, 696 So. 2d 697 (Fla. 1997). The pay down of the principal balance of a mortgage is an accumulation of capital contrary to Mallard.

In Suit v. Suit, 48 So. 3d 195 (Fla. 2d DCA 2010), the Court raised this issue by reasoning the payor spouse, “raised a legitimate concern about whether this portion of the alimony payment [associated with pay down of the mortgage principal] contains a concealed savings component that contravenes the holding in Mallard.” The Court acknowledged and emphasized, “that it is often appropriate for alimony to be based on reasonable housing expenses,” but, “[t]here is a point at which requiring one spouse to pay off a sizable future mortgage on property purchased as an investment is little different than requiring the spouse to fund a savings account or other similar investment.”

While the Court in Suit did not read Mallard to prohibit alimony that indirectly results in a small savings component to a spouse who is paying the mortgage, the Court noted its concern that if the alimony is used to pay off several hundred thousand dollars such an arrangement could be a type of savings alimony that is prohibited by Mallard. Ultimately, the Court in Suit did not decide the issue of whether alimony which includes the pay down of a mortgage is prohibited, but remanded the issue to the trial court to give this issue careful consideration when reexamining alimony on remand.

While there is arguably no clear answer to the issue, the mortgage expense associated with a home can be a significant expense which affects the alimony calculation and should be carefully examined and addressed in calculating permanent alimony.