Home equity in divorce when one party owned the home before marriage

Written by Posted On Friday, 20 March 2015 14:07


ED. - This is a guest post by my friend and local attorney Kathryn Wayne-Spindler. Kathryn specializes in family law, which encompasses estate planning and divorce and child custody types of cases. I end up getting involved in the disposal of the family home in many divorce cases and it is not unusual that the property may have been owned by one of the parties in the marriage before they even met. So, I asked Kathryn to comment for a post on what happens and how the court decides who gets what in divorce cases involving that scenario. Below is her reply:


In Michigan, the courts typically prescribe an “equitable” division of assets during divorce proceedings. This includes the equity in the family home. One factor that alters the “even” split, however, is if one of the parties owned the home before the marriage.


In the case of one party owning the home prior the marriage, the courts will usually return the down payment and any equity accumulated before the marriage, to the original owner. The remainder of the appreciated value would be split according to whatever formula the courts deem appropriate for the rest of the couple’s assets.


This holds true for marriages lasting less than 10 years. Long-term marriages are different because the assets have become so co-mingled over the years that determining which equity should be attributed to the down payment or other factors, becomes too difficult. Divorce Attorney Kathryn Wayne-Spindler said, “The definition of long-term marriage depends on the judge. Some say more than 10 years, but certainly 15 or more would count as a long-term marriage.”


In a long-term marriage, the proceeds from the sale of the family home, no matter who purchased it originally, would be split equitably. As Kathryn Wayne-Spindler has said, “equitable does not necessarily mean even. The courts start at a 50-50 split but take infidelity, each party’s income potential, and many other factors into account.” 


The courts also consider the amount of divisible assets when deciding who gets the profits from the house. So even if one party owned the home before the marriage, if the house is the couple’s only valuable asset, some of the proceeds will be awarded to each person. “In these cases, the goal of property division is to make sure that neither party will be left destitute,” said Wayne-Spindler.


In cases where the couple has been married less than 10 years and they do have other assets to divide, the original owner would need to provide documentation of the original property purchase including closing papers and cancelled checks showing the amount of the down payment.


Then a historical appraisal would be performed. A certified appraiser, like Norma Nicholson of Nicholson Appraisal Services in Milford, MI, would look at the value of the home at the time of the marriage. She would take into account the comps at the time, features and improvements. In addition to the retroactive appraisal, the certified appraiser would do a current appraisal. The difference in the two amounts gives the court a value of the divisible equity of the home.


In Michigan, in the last decade especially, housing values have been on a roller-coaster path. There are, unfortunately, cases where the house was purchased for a high price and actually lost equity because of market conditions. “In that situation, the equity was likely lost forever.” The good news is that property values in this state are rebounding in 2015 and many homeowners are finding increased equity in their homes once again.


In summary, if the marriage lasted less than 10-15 years and there are other divisible assets, the original down payment and equity accrued before the wedding would generally be returned to the party that originally owned the home. The equity accumulated between the marriage date and divorce would then be split equitably.


Ed. - So, like many areas of the law each case may end up slightly different, depending upon many factors; however, it does appear that at least some of the equity that may have accumulated during a marriage that lasted 10 years or more will be split. This may not be what either party wanted to hear, but there are very few outcomes in a divorce that end happily for either side. Should you become involved in a divorce situation or one that seems to be headed in that direction, seek the advice of  good attorney. If you are in the Milford, Michigan area I can think of no better attorney than Kathryn Wayne-Spindler, call 866-920-8064 .


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Norm Werner

Norm Werner is a Realtor at the Milford office of Real Estate One serving the southeastern Michigan area of Oakland and Livingston Counties. Norm specializes in residential real estate. Norm lives and works in Milford Michigan and is married to Carolyn Werner. Norm and Carolyn live in a historic home just three blocks from downtown Milford, with their two dogs - Sadie and Skippy. Norm specializes in the historic homes of Milford and the surrounding area and is on the Board of Directors of the Milford Historical Society. Norm especially enjoys working with first time buyers and those at the other end of the real estate spectrum who are downsizing into their retirement home. 

In addition to his Movetomilford.com web site, Norm also owns and m,aintains TheMilfordTeam.com web site, the HuronValleyRealtor.com web site. He is also the webmaster for and the MilfordHistory.org web site and the MilfordCar Show.com web site, as well as his church web site - Spiritdrivenchurch.com. In addition to blogging about real eastate, Norm has a personal blog - NormsMilfordBlog.com - on which he shares inspirational messages and the occasions personal observation about life. 


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