Home Valuation and Divisible Property

Good day. I have a question about divisible property. Husband has been in the home since separation over two years ago. Both spouses are on the deed, but only the husband is on the mortgage. Husband has been paying the mortgage this entire time, during which property values have drastically increased. My understanding is that typically under 50-20, the increase in value is considered divisible property. However, it also says, “except that appreciation or diminution in value which is the result of postseparation actions or activities of a spouse shall not be treated as divisible property.”

Could the husband’s paying the mortgage this entire time and maintaining the home for the kids be considered an exception that meets the guidelines above? The increase in the past two years has been pretty huge, so could him paying the mortgage this entire time and maintaining the home be considered postseparation actions and activities that create a legitimate basis for that increase in equity to be considered separate instead of divisible?

Thank you so much.

The increase in the value of the former marital residence is both marital and separate property.

The passive increase in value is marital property to which you’re entitled to half of. This is due to the real estate market increases.

The active increase in value is your husband’s separate property. The active increase would only be attributable to the principal paid on the mortgage since the date of separation (not the interest, escrowed payments, or PMI). This is because his separate efforts have earned separate income to which he has paid down the principal owing on the mortgage.

Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

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