By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Equitable Distribution on Monday, August 10, 2015.

Florida law is clear your pre-marital property is non-marital, and is property which cannot be divided by the court in a divorce. Or is it? People are often surprised to find out their premarital property is really at risk.

In a recent case from Fort Myers, the Husband owned a premarital building worth $900,000. Before he separated, the Husband sold the building for $680,000, a big loss.

The property was subject to a mortgage though, and during the marriage, the mortgage was paid down by the amount of $23,651.16 using marital funds. During the divorce, the Wife contended that she was entitled to an equitable distribution in the amount of the reduction in the mortgage.

The trial judge denied the Wife’s claim because the Husband’s property went down in value. Had it gone up in value during the marriage, the trial court may have considered it. The Wife appealed, and argued that using marital funds to pay down the mortgage on the Husband’s non-marital building enhanced the value of the property.

She won! Paying down on the mortgage enhanced the equity value of the Husband’s nonmarital asset. Even through the building did not appreciate in value during the marriage, the use of marital funds to pay down the mortgage enhanced the value of the Husband’s equity in the property.

I’ve written about property divisions before. Without the pay down of the mortgage, the proceeds the Husband would’ve realized from the sale of the building would have been reduced by an amount equal to the pay down of the debt.

The court held that the resulting increase in the equity value of the building was a marital asset subject to equitable distribution. The general rule is that “[w]hen marital assets are used during the marriage to reduce the mortgage on nonmarital property, the increase in equity is a marital asset subject to equitable distribution.”

The opinion from the appellate court can be found here.