Determining who will keep the house after a Florida divorce usually hinges on when, exactly, the house was purchased by either or both of the parties to the divorce.
If the house was bought after the date of marriage with money that either party earned after that date of marriage, the house will be considered a marital home and thus will be marital property.
Under Florida domestic relations law, marital property will be typically be divided equally by the courts. When a marital asset is a large single item like a house, that marital home will be sold and the proceeds will be split between the two divorcing parties.
A sale is not mandatory, however. The divorcing parties may come to an agreement where the party who gives up the house can keep additional assets to accommodate the half of equity in the house they forfeited. A common example is one party to the divorce will keep the house while the other party keeps the retirement accounts.
There are many practical reasons to not force the sale of a marital home but, rather, thoughtfully divide all the marital property so that one spouse may retain the marital home.
- The parties’ children may need to remain in the marital home to stay registered in their current school district.
- The immediate sale of the house can cause a capital gains tax that could be avoided if the parties wait two years or more from the date of the original sale to sell the now more valuable house.
- The current mortgage on the marital home may have an interest rate that is so low that neither of the parties could get a similar interest rate on a new house after the sale of the marital home.
Instead of selling and liquidating all of the marital assets, one party can keep the house instead of receiving alimony.
If the marital home was bought before the marriage by one of the parties, the house is non-marital and will be awarded to the divorcing party that originally bought the marital home. There are quite a few exceptions to this rule that need to be considered.
If through a refinance or some other means, the non-marital house gets titled in both parties’ names, it is shall be assumed 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 original house-owning party will have the burden of proving that the transfer of the home into both names was not a gift to the marriage
More commonly, when a non-marital home has increased in value during the marriage, that increase in value shall be considered a marital asset. “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, if you marry a very handy person who is constantly improving the house, those specific improvements become marital assets.
Much more typically, when mortgage payments are made by either party with marital funds 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”
There are two categories of equity in a house where a non-owner makes contributions. The non-owner definitely gets 50% of the reduction in the mortgage because of the marital payments. The non-owner can get 50% of the appreciation of the house after proving that they also paid some mortgage payments.
When a marital home does not have value and is merely a liability, the parties can do a short sale that property. A short sale of the sale of real property pursuant to an agreement with the bank that remaining mortgage will be waived upon completion of the sale.
If a divorcing spouse wishes to keep the property despite the property being a liability and not an asset, the parties can agree that the house-keeping spouse shall make good faith efforts to refinance the marital home every year until the debt finally is in the house-keeping spouse’s name. In the interim to that moment, the spouse who intends to keep the property shall be responsible for all future mortgage payments and shall indemnify their former another party from any and all liabilities (mortgage, taxes, insurance) associated with the former marital home.
The author, Russell Knight is a divorce attorney in Naples, Florida.