Passive Appreciation of Nonmarital Property
Posted By Posted by Damien McKinney on Oct 31, 2011 6:35am PDT || Oct 31, 2011
Many clients purchase a home before they get married and are curious about whether their spouse is entitled to any of the equity in that home during a divorce. The answer, as it very often is, depends on numerous circumstances. The Florida Supreme Court recently addressed this issue in a case entitled Kaaa v. Kaaa.
The Husband in Kaaa bought a home six months before the parties were married. The parties were married for 27 years before filing for divorce. During the marriage, they enhanced the value of the home by paying down $22,279 on the mortgage and renovating the carport increasing the value of the home by $14,400. The trial court held that the parties active contributions to enhancing the value of the home was marital property and subject to equitable distribution. The Wife argued that the passive appreciation of the marital home was marital property as well.
Passive appreciation refers to the natural market forces that appreciate (or depreciate) the value of the home over time. The Florida Supreme Court held that the passive appreciation of the marital home was indeed marital property subject to equitable distribution when 1) the value of the home appreciated during the marriage while marital funds were being used to pay the mortgage and 2) the Wife made contributions to the home. The Court reasoned that because paying the mortgage is a prerequisite to enjoying the appreciation in value of a marital home, they concluded that principles of equity do not allow an owner spouse to receive the full benefit of the passive appreciation when the nonowner spouse contributed to the property, and marital funds were used to pay the mortgage.
The Florida Supreme Court went on to set forth the ways a trial court should determine an award of passive appreciation. If you think you might have contributed to a nonmarital property and should be awarded an equitable interest in the passive appreciation of your home, contact your expert family law attorney to discuss this issue and whether it might apply to your dissolution of marriage case.