Opinion ID: 1929096
Heading Depth: 1
Heading Rank: 7

Heading: Husband's Lien on Home

Text: The parties in this case were married on December 15,1962. In its January 31, 1994, decree, the trial court ordered the marriage dissolved. In its decree, the trial court equally divided the parties' equity in the family home by awarding the wife the home subject to the unpaid balance of a commercial mortgage and subject to a non-interest-bearing $20,144 lien in favor of the husband, both of which the wife was ordered to pay. Under the trial court's decree, the wife could pay the lien at any time, but no later than when the house is sold, the wife retires, or December 26, 2006, whichever first occurs. As previously stated, on appeal the Court of Appeals ordered the wife to pay the husband 8 percent interest, compounded annually, on the unpaid balance of his hen. This type of hen on the family home is part of a deferred property distribution. The wife complains that the Court of Appeals erred in requiring her to pay interest on the husband's hen against the family home. It has been well established that Neb.Rev.Stat. § 45-103 (Reissue 1993), Nebraska's statute providing for interest on judgments, does not require interest to be charged on a marital deferred property distribution. See, ThUtges v. ThUtges, 247 Neb. 371, 527 N.W.2d 853 (1995); Dryden v. Dryden, 205 Neb. 666, 289 N.W.2d 525 (1980). However, it is within the discretionary power of the district court to award interest on deferred installments payable as part of a marital property distribution, and those decisions will be upheld absent an abuse of discretion. See, ThUtges, supra ; Seemann v. Seemann, 225 Neb. 116, 402 N.W.2d 883 (1987); Nickel v. Nickel, 201 Neb. 267, 267 N.W.2d 190 (1978). When utilizing this discretionary power, a factor the district court or the Court of Appeals should take into consideration is the burden on the payor spouse. See, ThUtges, supra ; Nickel, supra . In the case under consideration, the trial court abused its discretion in not awarding interest on the husband's lien. A de novo review of the record reflects that the payment of simple interest on the unpaid balance of the hen will not be an intolerable burden upon the wife, the payor spouse. Further, because deferred awards lose value over time, interest payments may be added to reflect the actual value of the award. An interest-free deferred property award, such as a husband's hen on the family home, is the kind of asset most vulnerable to the ravages of inflation. See ThUtges, supra . Under the circumstances of this case and taking into consideration our reinstatement of the wife's $250-per-month alimony award, a reasonable division of the equity in the parties' home can result only if the husband's hen bears a reasonable rate of interest. The Court of Appeals' decision to award the husband interest at the annual rate of 8 percent on his hen on the family home was proper under the facts of this case. However, the Court of Appeals committed error when it ordered that the interest be compounded annually. In the absence of a contract or statute, compensation in the form of compound interest is not permitted to be computed on a debt. Lincoln Lumber Co. v. Fowler, 248 Neb. 221, 533 N.W.2d 898 (1995); Ashland State Bank v. Elkhorn Racquetball, Inc., 246 Neb. 411, 520 N.W.2d 189 (1994). Because no compound interest contract or statute is involved in the present case, compound interest is not authorized and will not be permitted. We modify the decision of the Court of Appeals and order the wife to pay on the husband's hen on the family home simple interest at the rate of 8 percent per annum from the date of the trial court's decree. Such interest may be paid by the wife monthly, semiannually, or annually on the principal balance of the husband's hen from time to time remaining unpaid, as determined by the trial court on remand.