By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Equitable Distribution on Friday, July 22, 2016.
Bought your home before your marriage, it’s yours right? Not necessarily. Florida has some peculiar property division laws you should be aware of.
Most people believe that if you bought your home before you got married, the property is separate property, and therefore cannot be equitably distributed by a family court.
Florida has some unique rules about premarital property that clouds that general rule. Your spouse may have a right to some of the home’s equity upon divorce despite it being separate property.
Florida’s General Rule
A court must set apart to each spouse that spouse’s nonmarital assets and liabilities. Nonmarital assets include assets acquired prior to the marriage. That is the general rule in Florida, but there may be exceptions.
Appreciation in Value Exception
In dividing marital assets, Florida courts take into account the active appreciation of nonmarital assets during the marriage. Appreciation could have been caused by spending marital funds or management of a property.
Courts can take into account passive appreciation on nonmarital assets, such as inflation, which is not subject to division. But, Florida courts have long agreed that paying down of a mortgage with marital funds on nonmarital property during a marriage is a marital asset.
In Florida, “marital assets” includes the “enhancement and appreciation of nonmarital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both.”
The Supreme Court of Florida has pronounced that “the trial court must make a finding that the non-owner spouse made contributions to the nonmarital property during the course of the marriage.”
There are certain steps a trial court should employ to determine whether a non-owner spouse is entitled to a share of the passive appreciation of property:
1) Determine the overall fair market value of the home;
2) Determine whether there has been a passive appreciation of the property;
3) Determine that marital funds were used to pay the mortgage, that the non-owner spouse made contributions to the property, and “to what extent the contributions of the non-owner spouse affected the appreciation of the property”;
4) Determine the value of the passive appreciation; and
5) Determine the share of appreciation deemed “marital.”
Prenuptial Agreement Exception
If a couple entered into a valid prenuptial or postnuptial agreement, and the agreement makes a provision for a spouse to obtain an equitable interest in the house over time, a court can consider this in any equitable distribution.
I’ve written about property divisions before. Equitable distribution can be tricky, even when you have clear-cut, nonmarital assets.