Mortgagor Rhymes With Poor

An opinion from the South Carolina Advisory Committee on Standards of Judicial Conduct

ADVISORY  COMMITTEE ON STANDARDS OF  JUDICIAL CONDUCT
  OPINION NO. 2-2015

RE:      Whether a Family Court judge is required to include another  attorney’s assumption of judge’s mortgage payments on judge’s disclosure  statement.

FACTS

Prior to being  elected, a Family Court judge had an office sharing situation with Lawyer #1  and Lawyer #2, in a building owned by the judge and Lawyer #1.  The judge agreed that if the judge was  elected to the family court bench, the judge’s interest in the building would  be transferred to Lawyer #2, who would then assume the judge’s portion of the  mortgage debt.  After being elected, the Judge  learned from the bank that the mortgage was not assumable and that Lawyers #1  and #2 would have to re-finance the debt.   Because of some complications arising from Lawyer #1’s financial and tax  circumstance, the re-finance could not take place.  Since the judge’s election approximately 3  years ago, the judge has tried diligently to divest the judge’s interest in the  building, but the transfer has not yet taken place. 
  Since the election, the judge has  not paid any mortgage payments or monthly expenses (except for property taxes  for the year the judge was elected, where the judge actually practiced in the  building for 6 months prior to election).  The judge has not received any rent from  Lawyer #2 or any tenant in the building. The judge has raised the issue of  whether the Judge needs to report the monthly mortgage debt that has been paid  by Lawyer #2 as income, as it may be considered that the judge is renting the  judge’s portion of the property to Lawyer #2, who pays the judge’s portion of  the mortgage as rent.  The judge’s  accountant has not claimed any income from the building or deductions from the  mortgage debt. 

CONCLUSION

A family court judge does not need to report  another party’s assumption of mortgage payments on property owned by judge as  income on the judge’s disclosure statement, but the judge should disclose the  mortgage debt in judge’s name.

Because

The judge is  not receiving money for services rendered or monetary payments for rent.  Lawyer #2 has effectively (albeit informally)  assumed the mortgage, but the judge receives no money or rent, and does not  claim the mortgage as a tax deduction.  Thus,  the judge is not required to report Lawyer’s #2’s payment of the mortgage as  income on the judge’s disclosure statement. The judge should, however, disclose  the existence of the mortgage in judge’s name and provide an explanation of  Lawyer #2’s assumption of mortgage payments.

The title to the post honors my late friend Professor Steve Goldberg, who liked that easy-to-understand explanation of who was who in the mortgagor-mortgagee relationship. (Mike Frisch)