Question:
My Husband and I have been married for 12 years.  During our marriage, we lived in a Home that he purchased prior to marriage for $125,000 – and which was encumbered with a mortgage.  I did not contribute towards the purchase of the Home, and the Home remains titled solely in my Husband’s name.  However, during our marriage, I did contribute my earnings towards payment of the mortgage and other expenses associated with the improvement and repair of the Home.  Although today’s real estate market is not too good, a comparable property sold down the street for $300,000.   We are now getting divorced.  My Husband contends the Home is his non-marital asset and that I am not entitled to any of it.  Is this true?

Answer:
I would argue that you have a claim to the “passive appreciation” of your Husband’s non-marital Home under current Florida Law. The Florida supreme court recently came out with an opinion in the matter of Kaaa v. Kaaa, 39 Fla. L. Weekly S521 (Fla. 2010) which provides that passive appreciation of a non-marital asset may be a marital asset under certain circumstances, which as here, a mortgage is encumbering the Property (or was encumbering the Property during the marriage); and you have contributed towards both the mortgage and other expenses associated with the Property.  Your entitlement to a claim is against the appreciation/ enhancement in value of the non-marital Home and not the Home itself.  Further, you would have the burden of proof that your monetary contributions and/or marital efforts “enhanced the value” of the Home.

For example, let’s say the Home was worth $X at the date of marriage and was encumbered with a mortgage of $Y.  Further, during the marriage, the parties applied their respective earnings (marital funds) towards the payment of the mortgage (principal reduction) and the improvement and repair of the Property.  Let’s further assume that the mortgage balance had been reduced during the Marriage and the Property’s value increased by $100,000.  If you prove that your monetary contributions resulted in principal reduction of the mortgage; that improvements (such as, without limitation, the addition of a swimming pool, new roof, conversion of a car-port into a garage, room addition; etc) enhanced the value of the Home; and that your marital efforts towards repairs and maintenance of the Home increased it’s value, then you would be entitled to a claim against the Home’s appreciation in value (against the $100,000 enhancement in the example, above, not the Home itself).

The foregoing is not intended as legal advice.  If you are in need of legal advice and/ or more information on the recent amendments to Florida’s alimony statute (section 61.08), the please feel free to schedule a free initial consultation.

Does a spouse have a marital claim to the other spouse’s asset(s) acquired prior to their marriage?

QUESTION:  
I own a beach property, which I acquired prior to my Marriage. My Wife did not contribute towards the purchase of this Property. During our Marriage, my Wife and I spent an approximate $40,000 on miscellaneous repairs to the Beach Property, such as replacing a leaking roof and windows, repairing water damaged walls and other general upkeep/ maintenance type matters. We did not make any improvements to the Beach Property. I never put my Wife’s name on the title, and the Mortgage encumbering the Beach Home remains in my name. Does my Wife have any claim to a portion of my Beach Home?

ANSWER:   
Let’s assume the Beach Home had a Fair Market Value of $ 200,000 at the date of marriage and that the Home is  worth about $ 800,000 in today’s market.  Did the repairs ($40,000) lead to any of the increase in value from $200,000 to $800,000? Although the types of repairs seem necessary, I do not believe they enhanced the value of the Home. The fact that marital funds were used to finance the repairs does not convert your non-marital Beach Home into a marital asset.    Improvements, such as room addition or installation of a pool or converting a car port to a garage, may enhance the value of a real property. Such enhancement in value of a non-marital asset is “marital”, and the non-owner spouse would have a 1/2 claim to this enhancement in value (not the entire asset itself). The burden of establishing the value appreciation is on your Wife, the non-0wner spouse, and I do not think she will be able to prove any enhancement in value as a result of the repairs made to the Beach Home.   

You mentioned a mortgage encumbering the Beach Home. If, during the marriage, you paid down the principal on the mortgage, then your Wife may have a claim to 1/2 the pay down.  Only the actual amounts spent toward mortgage principal reduction are marital assets subject to a claim by the non-owner spouse (your Wife), but any increase in value of the Beach Home resulting from passive appreciation (such as inflation or certain market forces) is not a marital asset.

Situation:

During their Marriage of several years, let’s say 8 years in length, the Husband contributed significant funds from his premarital assets towards the purchase of the parties’ Marital Home.   The Home is titled jointly in both parties’ names as “Husband and Wife”.  Let’s further say that the Wife did not have any assets at the date of marriage and, therefore, the Wife did not contribute any separate, non-marital funds towards the purchase of the marital home.  Further, the Wife did not work during the Marriage except for brief periods of part-time employment and pretty much was a stay-at-home mom raising the parties’ two children.   The parties are now getting a divorce, and among other issues, the Husband claims that the Marital Home should be awarded to him as his separate, non-marital property or that he should receive the Home as part of an UNEQUAL distribution.  

Does the Husband prevail on this issue?

Answer:

Based on the foregoing, probably not.   The Court will first separate out the parties’ non-marital assets from those that are “marital”.  In this case, the Home was purchased during the parties’ marriage and is jointly titled (“tenants by the entireties”, or as “Husband and Wife”).   During the marriage, the parties’ earnings (including the Wife’s part-time employment earnings) were applied towards the mortgage, maintenance, repair and improvement of the Property.   Let’s assume arguendo that the Court finds the Property to be a marital asset.  “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.”  Section 61.075(6)(a)2., Florida Statutes.

But, is the Husband entitled to an “unequal distribution” of the Marital Home as a result of his acquiring it with his pre-marital (non-marital) funds?   Once the Court identifies the marital assets and liabilities, including the marital home and the mortgage encumbering it, the starting point is an equal division (50- 50).  However, the Court may award an unequal distribution of a marital asset(s) if justified.  In this case, the Court may consider the Husband’s contribution of non-marital funds towards the acquisition of the Home in determining whether the Husband is entitled to an unequal distribution of that asset.  The burden would be on the Husband to prove his entitlement to an unequal distribution. 

Given the facts as stated herein, Florida case law suggests that the Husband will probably not prevail on this argument.   Let’s say the Husband could prove that the purchase of the Home was from a significant contribution of his non-marital funds.   However, the Wife may argue that the Husband’s non-marital funds used towards the purchase of the Home were, in essence, “commingled”, especially in light of the fact that the parties took title to the Property as “Husband and Wife” and, thereafter, both parties contributed to the maintenance and upkeep of the Property.    The Wife may further argue that the Husband’s contribution, as commingled, is untraceable and/ or was a gift from the Husband to the Wife.   Further, even though the mortgage principal was reduced primarily as a result of the Husband’s marital earnings, this does not give him any further legal basis for an unequal distribution.  

One other noteworthy matter.   The parties have two minor children.  Let’s say that the children have lived in the marital home since birth; that the Home is within their school district; and the note/ mortgage payment with taxes and insurance, is “financially feasible” (for example, the monthly mortgage payment including taxes and insurance is relatively affordable and rent for a leased property would be the equivalent cost).   Let’s assume the Husband gets a majority of overnights with the children as part of the parenting plan.  Can the Husband obtain an unequal distribution of the Home in this instance?    A parent may obtain the exclusive use and possession of Home (not ownership) if maintaining the Home as a residence for the children during their minority is desirable and same would otherwise be in their best interests and, further, to do so is “financially feasible”.  Section 61.075(1)(h), Florida Statutes.    The Wife may argue that the Home is the parties’ only significant asset, that it has equity and she is in need of her 1/2 share of the equity to re-establish herself in another residence.   If the Court agrees with the Wife’s position, then the Husband may not be awarded the exclusive use and possession of the Home during the minority of the children (although he may refinance and buy out the Wife’s interest).