Q: I brought $75k of equity to purchase our first house together to my husband’s $0
Since then we have purchased another house using all the equity from the first. Am I entitled to recoup the $75k when we settle the house during the divorce?
A: First you needs either grounds or an agreement to get divorced. In a contested case you need to be able to prove that you brought separate property into the marriage. The appreciation in value of marital property will be subject to a equitable distribution by the Court. The husband may claim you dissipated marital or his separate property. His contributions to the marriage will be considered also. Hire a competent attorney to start preparing for a tough divorce action.
A: Thank you for your question. First, you have to decide whether the divorce will be an agreed divorce or a contested divorce. It is possible that your husband will agree that since you came into the marriage with the $75,000, it is yours and should be awarded to you in the marital dissolution agreement. Remember, the marital dissolution agreement is a contract, and parties are able to negotiate. If negotiation fails and it is contested divorce, the question becomes whether the $75,000 is considered separate or joint marital property.
Separate property is property that you own apart from the marriage. Separate property is awarded to the spouse who owns said property in the divorce. Joint marital property is property that you and your spouse own together as part of the marriage. Joint marital property is equitably divided by the court in the divorce.
Since you came into the marriage with the $75,000 used to purchase the first house, it likely started as separate property. However, since you invested the money in a house that was considered the marital residence, then purchased another house (again the marital residence) with the proceeds, it is likely that your $75,000 was transmuted from separate to joint marital property (this is especially true if either property was titled in both spouses' names).
There is also a principle called commingling. Commingling is when separate property becomes entangled with joint marital property, as in a bank account or a real estate purchase. Based on the facts of your case, a court may decide that your initial investment was commingled with your marital finances through two purchases of real estate. The court will look at the other contributions to the marriage as well, both financial and non-financial. Then, the court will equitably divide the marital estate.
As was previously stated, these are factors the court will consider as well as several others in a contested divorce. It is usually best to try to agree on terms through an agreed divorce if possible. In a complex case such as yours, it is important to hire an experienced attorney to discuss all of the factors (not just this one) so you can make an informed decision on which route to take.
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