Equity for houses my wife owns


#1

Hi,

I live in North Carolina.
We are married for 4 years, separated for almost 1 year.

When we married, I moved in her house and we both paid the mortgage.
Beside that, she owns 3 rental houses, the rents were deposit on our common account.
I was involved in any repair and even a remodeling of those houses.

I own 1 rental property (abroad) and the rent is deposited in my own bank account (abroad)

Apparently, (official numbers) the median sale price for the same type of houses didn’t change from the date of the marriage to the date of separation.

Am I entitled of half of the principal that we paid during the marriage ?
Is she entitled of half of the principal that I paid for my house (during the marriage) ?

Could she find a way not to have to pay ?

Thank you


#2

If there was an active increase to separate property during the marriage, the value of that increase is considered marital. The marital funds contributed to your wife’s mortgage is considered an active increase and thus is marital. The active increase in property due to the repairs/remodeling is also marital. Along the same lines, if marital funds were used to pay the mortgage on the home that you own abroad, that active increase would be considered marital and she is entitled to some value based on the principal payments made with marital funds.

For an in depth look at equitable distribution, and how both passive and active increases are treated, read our article on Equitable Distribution.


#3

Thank you for your answer,

a question, the rents for her rentals properties are more or less equal to the mortgages (+ taxes and insurance)

but she deposits those rents on our common account, does it make it automatically marital funds ?


#4

N.C.G.S. § 50-20(b)(2) provides:

“The increase in value of separate property and the income derived from separate property shall be considered separate property.”

However, you could argue that because the rental income is deposited into a joint account, it is a gift to the marriage. Whether or not the payments are considered marital will really depend on the circumstances. If your spouse’s clear intention was for the funds to be separate (i.e., funds used to pay mortgage and other house-related expenses), it will most likely be considered separate. If the rent payments were spent as if it were marital funds, then it may be considered marital.