Premarital Agreement Prevented Spouse from Claiming Equity Interest in Farmland

April 11, 2023 | Jennifer Harrington

The Iowa Court of Appeals examined the distribution of farmland property during a divorce when a premarital agreement waived “any right or interest in the real property of the other,” and the wife argued that marital assets were used to pay down debt on the property.  The court held that the premarital agreement precluded the spouse from receiving credit for any debt payments. The spouse’s request for credit amounted to a claim of interest in the property and she had waived her right to bring this claim in the premarital agreement.

Facts

Ashley and Jacob Weiland were married in 2011. Prior to the marriage, they entered into a premarital agreement. The premarital agreement stated that the real property owned at the time of the marriage by either individual, plus any appreciation of the property during the marriage, would remain the property of the original owner “without claim by the other party[.]” In addition, the agreement stipulated that they would “not assert a claim to any right or interest” and they both released each other and the real property from any claim due to divorce. 

At all relevant times, Jacob was a 50-percent owner of farmland with his brother. During the marriage, the couple reduced the farm debt by $62,736.  During the divorce trial, Ashley offered evidence showing money transferred from her individual account and the couple’s joint account into the farm bank account. Jacob argued that Ashley only transferred funds to the farm account when she made personal purchases using those funds.

The couple divorced in 2019. As part of the proceedings, Ashley claimed the debt reduction was paid with marital funds, and therefore equity required she receive a credit of $31,368 when calculating the property division. She argued that the premarital agreement waiver of any claim to the appreciation in the farmland’s value only applied to the appreciation attributable to market conditions, not to increased equity in the property due to debt repayment.

The district court found that the premarital agreement did not allow Ashley to receive credit because the premarital agreement specified that all appreciation of the property would remain the property of the original owners. Specifically, the court found that this clause included the appreciation of equity due to debt repayment.  

Analysis

The Court of Appeals agreed with the district court’s result, but not its reasoning. The court found that the premarital agreement was valid and that it controlled how the farmland equity would be treated during the asset division. Reviewing the terms of the agreement, the court found that Ashley had released all claims relating to the real property. Her argument that she is entitled to equity within the real property due to the debt repayment is “a claim to a right or interest in the real property.” Therefore, the premarital agreement prevents her from receiving any credit for the debt repayment.

The court further stated that Jacob did not “receive a windfall at her expense” since there was evidence that the farm account repaid most of the amount received from Ashley’s personal account. Jacob also testified that the debt was paid by money generated from the farm.