In a Florida divorce, the time of the purchase of the house will often determine who keeps the marital home.

If the house is purchased after the marriage with funds that either party earned after the marriage then the house will be considered marital property.  Marital property will be typically be split equally (50/50) by the courts.  In the case of a large single asset such as a house, that means the house will be sold and the proceeds will be split.

The divorcing parties, however, may make their own arrangements where the party who does not keep the house will get additional assets to make up their half of equity in the house.  For example, one party may keep the house while the other party keeps the retirement accounts.  In Naples, Florida, property values are extremely high compared to the rest of the state so it is often difficult to balance the value of the home against the value of the other marital assets.

There are numerous reasons to not immediately sell a home and instead divide all the marital property so that one spouse can keep the house.

  • The parties children may need to live in the house to stay in the school district.
  • An immediate sale of the house may trigger a capital gains tax that could be avoided if the parties wait 2 years from the date of the original sale.
  • The current mortgage may have an interest rate that is so low that neither of the parties could get a similar interest rate on a new house. (In this case, the house keeper indemnifies the other party for a reasonable period of time before refinancing).

Instead of balancing the assets, one party can keep the house in lieu of maintenance and possibly live off of a reverse mortgage.

If the house was purchased before the marriage by one of the parties, the house is non-marital and will be awarded to the party that originally purchased the house.  There are a few exceptions to this rule, however.

If through a refinance or some other means, the non-marital house gets titled in both parties’ names, it is presumed that the house is marital property. “All real property held by the parties as tenants by the entireties, whether acquired prior to or during the marriage, shall be presumed to be a marital asset. If, in any case, a party makes a claim to the contrary, the burden of proof shall be on the party asserting the claim that the subject property, or some portion thereof, is nonmarital.” Fla. Stat. Sec. 61.075(6)(e)(2). Therefore, the owner spouse will have the burden of proving that the property was not a gift to the marriage.  To do so will take some seriously interesting facts like lack of knowledge or that the property was passed down in the family for generations.

When a non-marital house has increased in value during the marriage, that increase in value may become marital.  “The enhancement in value and appreciation of nonmarital assets resulting 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.” Fla. Stat. Sec. 61.075(6)(a)1b.

So, when a spouse helps improve a house, that improvement is essentially a marital asset.  This could be declaring that an addition to the house is a marital asset or just that a new coat of paint increased the value of the house by $ 500 and therefore, $ 500 of the equity of the house should be split.

When mortgage payments are made by both parties on a non-marital home, the equity of the home may become marital when the court finds that the non-owner spouse made mortgage payments and the court determines “to what extent the contributions of the nonowner spouse affected the appreciation of the property” Kaaa v. Kaaa, 58 So. 3d 867 (Fla. 2010).   There are two portions of the equity of a house where a non-owner makes contributions.  The non-owner definitely gets 50% of the reduction in the mortgage because of their payments.  The non-owner MAY get 50% of the appreciation of the house upon proving that they contributed to mortgage payments.

When a property is not worth anything and is merely a liability, the parties will often short sale the property.  A short sale is when you sell the property with an agreement with the bank that outstanding debt will be eliminated after the sale.

If one party wishes to keep the property despite the property being a liability, the parties can require that party to make a good faith effort to refinance the property every year until it finally is refinanced.  In the meantime, the party keeping the property will be responsible for all mortgage payments and will indemnify (take responsibility for) the other party from any liabilities associated with the property.

Contact my Naples, Florida office to learn what is likely to happen to your house in a divorce.