Is a House Purchased Prior to Marriage Considered Marital Property?
Let’s say one individual—person A– owned a home prior to getting married, and the newlyweds lived in that home during the course of their marriage. As renovations and improvements were made on the home, and even as it was refinanced, the home stayed solely in the name of person A. At some point the couple divorces, and person A believes that since the home was purchased prior to marriage, it is theirs alone and should not be considered part of the marital property to be divided equitably under Florida law. Person B, the spouse whose name is not on the deed, disagrees. Who’s right?
In order to decide the case, it is important to look back at Florida precedent. Back in 2010 a case exactly like this was heard by the Supreme Court of Florida. In Kaaa v. Kaaa, Mr. Kaaa purchased a home six months before marrying Mrs. Kaaa. During 27 years of marriage the home saw several improvements and was refinanced multiple times, but remained only in Mr. Kaaa’s name. Additionally, the mortgage was paid with Mr. Kaaa’s earnings. The value of the home increased substantially over time, but the trial court determined that Mrs. Kaaa was entitled to one-half of the value of enhancements made to the home during the 27 years. Mrs. Kaaa appealed, believing she was entitled to half of the appreciation that had occurred during the marriage, and the Florida Supreme Court agreed with her. Additionally, the court created a formula for courts to use in determining passive equity in similar situations, all based on the fact that earnings during the marriage were paid toward the mortgage and that both parents contributed in some way—monetarily or otherwise—to the home. Those steps include:
1- Determining the fair market value of the marital home at the time of the divorce;
2- Assessing whether there has been passive appreciation between the time of the marriage and the time of the divorce, and if so, how much appreciation has occurred;
3- Determining if any passive appreciation should be considered a marital asset under Florida law;
4- Determining how the value of the passive appreciation should be divided.
Circumstances Impact Outcome
There are several possible scenarios that could impact how passive appreciation is allocated:
1- For a home completely financed during the marriage, the value of the entire home is part of the equitable distribution assessment.
2- If payments were made prior to the marriage, the value of those payments would be deducted from the value of the home at the time of the divorce, and the rest would be equitably divided.
Fighting for Best Outcomes for You
At Wise/Lieberman, our trusted Boca Raton divorce attorneys provide you with the facts you need to proceed through divorce and obtain the best possible results. To discuss your circumstances, schedule a confidential consultation in our Boca Raton office today.