Mortgage, Appreciation and Sweat Equity


#1

I think you really have to read the prenup (I’m assuming that’s what you have) carefully. If the prenup says something about the house being the sole possession of the wife-it may say something about increased equity. The legal jargon is hard at times.

I believe the increase in equity would be the difference between the equity at the beginning of the marriage and at the end. I don’t think you can add the ‘value’ of the house today to the equity number. I was a little confused with your calculation of 25K plus 100K.

Either way, if there is equity and you’re allowed 1/2 of that (depending on what the prenup specifies), then she would have to give that to you in cash or other ‘settlement’ agreeable to you both. You can’t make her sell the house. Your ‘sweat equity’ would be considered a gift-I believe.

I’m also not sure of the assets she liquidated counting as income.


#2

BE CAREFUL with this. I got screwed the same way. Our prenup had a clause in that stated that the prenup was null and void after 5 years of marriage. We were married and lived together for 9 years the prenup was null and void CLEARLY. the court still saw it as she owned the house prior to marriage- even though she had only owned the house for THREE months before we began to cohabitate and I was p[aying half the mortgage AND paying on the home equity line SOLELY. she claimed there was no equity left in the house after we separated. Yet she still refinanced the house TWICE in the last two years and got money from it. If there was no equity left then how was she able to get money out of it AFTER she consoildated the home equity line AND the primary mortgage? get your ducks ina row before tackling this one or you WILL get screwed.


#3

I am going to answer assuming the pre-nup does not address this issue,however it is unlikely that the pre-nup doesn’t address this issue. If the pre-nup distributes the house to her it may very well say that she receives the house and any and all equity in the house.

If the pre-nup does not address the equity then you would be entitled to receive one half the value of any increase caused by your active work. This is not the entire increase in value, but the increase due to the work that you have put in. It is likely you will need an expert to help with this valuation. If she used her separate property to pay the mortgage and can trace those payments, then any decrease in the mortgage as a result of those payments are her separate property.

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#4

In calculating “Marital Property” how would a case like this be handled? My wife and I are curerntly separated >1Month, with no documents or representation . . .

Wife took home loan, made down payment of (X) and is sole owner of deed to house. Owned home prior to marriage date, and home is listed in a premarital agreement as wife’s property. Property was significantly increased in value by renovation, mostly done by husbands “sweat equity” and materials provided by husband’s bersonal business. Mortgage and Household Expenses were paid from a bank acount owned solely by wife, however husband made regular deposits to the account to go towards mortgage and expenses. Wife produced very little cash income but had premarital assets (stocks - listed in premarital agreement) that she liquidated to cover bills and mortgage. All paymets have been made through several different accounts, making the ability to account accurately nearly impossible. Wife also has cared for our child, which certianly deserves value in the equation as well.

In a previous post I’ve read (paraphrasing) the value created by paying down the mortgage on a premarital asset (a home) by the non-owning spouse creates a marital asset (the extra equity created). Is this a correct assumption? Does it mean that, if, say the premarital value of the house was $75K equity on a $275K valued home, and the equity now is $100K on a $375K home, that the “Marital Asset” created is $125? (25K increase in equity + 100K increase in value) and finally if-so, how do you equitibly distribite the “increase in value” if the home is not sold?

Can the increased value from “sweat equity” be calculated in cash terms? Husband worked day and night on weekends and gave up a lot of time with his son in order to provide the gained property value from the renovation. Is this pro-bono work? :wink: Or can it be documented and calculated into asset distribution?

Will the liquidated premarital assets (the stocks cashed in to pay bills) be calculated differently than “income” because they were stated in a premarital agreement?

DrPepper