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Michigan Family Law Blog

Friday, January 6, 2017

Divorce in Michigan and Escrow of Funds

I am a divorce lawyer in Oakland County, Michigan.  I read every family law case decided by the State Court of Appeals and Supreme Court in order to keep on top of new decisions and developments.  The matter of Bergh v Bergh, COA 329152, October 13, 2016, was an interesting case with a reminder that if you cannot agree regarding a sum of money or the proceeds from the sale of a home, then it is always wise to make sure there is an order in place to escrow the funds until a final decision is made on how those funds should be disbursed.

In that case, the wife claimed that the husband promised to pay for their daughter's college education.  The husband denied this but the court found that he had reluctantly agreed to pay.   It then ordered that the parties would pay the daughter's outstanding student loan debt with the proceeds from the sale of the marital home.  The husband's attorney argued on appeal that the court, as a divorce court, could not order the husband to pay a third party (the daughter) based on a promise to the third party.  I believe that the Michigan Court of Appeals would have agreed with this argument and reversed the decision of the court. 

However, in this instance, the appellate court did not make a ruling, instead it found the issue moot.  While the appeal was pending, the parties sold the marital home and paid-off the daughter's $30,329 Navient student loan debt out of the proceeds.  Once this occurred, the issue was moot and the husband was out of luck.  His attorney should have requested a stay from the court pending appeal or otherwise demanded that the proceeds attributable to the student loan debt be held in escrow pending the outcome of the appeal.


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