I am working on creating the settlement for my upcoming divorce and of course a big question is how does the equity in the house get split.
She bought the house a month before we met with a down payment of ~20% according to her. During the next year, we refinanced the house under both of us and she added me to the deed. A few months later we were married. We have refinanced a few times in the 9 years of marriage, and I contributed more in the end towards the mortgage payments and equity as she only worked about half of that time.
Would the equity normally be split 50/50 in this case or does the fact that she put the deposit down affect that?
Thanks for the help!
The house can likely be classified as marital property. Even though your wife bought the house prior to the date of marriage, if your income during the marriage contributed to paying down the mortgage, then the house is marital property. When a house is marital property, then it is subject to being divided in equitable distribution (property division).
Typically the equity in the house will be divided 50/50 upon the sale of the house, or one spouse will keep it and “buy out” the other spouse. However, the exact division will depend on the entire marital estate and the value and the division of the other assets. The requirement is that the division of the equity must be equitable under the circumstances.
Anna Ayscue
Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest
Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here
The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.
Thank you! I want to be fair, but I think she is thinking that since I left, the house is hers and that would not be fair to me. Thanks for the help!
Hi,
I wanted to clarify a bit further on this, as she has now come back with a proposal that includes her down payment to increase the amount I would owe her. If this went to court, would the house be split 50/50 on the ending value only (equity at the time of separation) or should the down payment be excluded from that value (50/50 less down payment)?
Thank you again,
Jeff
We use the equity as of the date of separation to determine a “buy out” amount for a house that is marital property. The equity is determined by the fair market value as of the date of separation (What could the house be sold for?) less the balances on the mortgage, second mortgage, and home equity line of credit as of the date of separation. The down payment is not considered because it would already be factored into the equity.
Anna Ayscue
Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest
Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here
The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.
Thank you for your prompt response.
I have an additional question on the property value:
If the value of the property has increased since the time of the separation, but before the date of distribution, would that increase in value (not increased due to changes made by either spouse but by appreciation only) now be considered divisible property that should be split 50/50? For example, if the separation was on 1/1 and the property had a value of $100,000, but as of the date of distribution, say 10/1, the increase of value caused the property to now be worth $105,000, is that additional $5,000 considered divisible 50/50?
Thanks!
Yes, any appreciation in the home, as long as the home is considered marital property, is also subject to being divided in equitable distribution.
Anna Ayscue
Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest
Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here
The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.