Who gets the proceeds from the sale of the house in a divorce when initial purchase was from one spouse’s funds?

Question

I'm seeking guidance on the equitable distribution of marital property during a divorce. My spouse and I lived together for three years before purchasing a house using money from my bank account, with the title initially solely in my name. We got married two years later and, seven years afterwards, sold that house to purchase another with the proceeds, jointly taking out a mortgage on the second home. Now, three years later, as we are divorcing, I am arguing that I am due a larger share of the proceeds from the sale of the second house because I made significantly more financial contributions originally. However, my spouse claims that since the proceeds from the sale of the first house, which became marital property during our marriage, were used to buy the second house, it should be split equally, fifty-fifty. We both actively participated in all decisions regarding these homes, which served as our primary residences. Who is correct in this property distribution dispute?

Richard Diamond · Answer

The easy answer is that you should meet with a divorce lawyer for a consultation to discuss all of the issues outstanding in your matter BUT, without knowing anything more, candidly, you will lose this argument before a judge and the proceeds will be divided equally.  
Here are several reasons why: 
1. You and your spouse lived together before marriage and an argument can and will be made that you and she lived in a relationship akin to a marriage during that period of time even though you may have maintained separate bank accounts - so it wasnt simply your money that paid for the down payment - concept is called "tacking onto the marital term:.  
2. The home, while initially acquired in your name alone, was acquired " in contemplation of marriage" and taken in your name alone because your credit was better than hers, etc. 
3. Title to the house was transferred into joint name - meaning that you intended to make a gift of a potential immune asset into a joint asset, subjecting it to equitable distribution. 
4. The monthly payments for the mortgage came from your employment / her employment, meaning the pay down ( if any) of the debt was with marital funds 
5. The jointly held asset was sold and a replacement home was then purchased using the joint marital funds from the sale of the prior joint asset and a new mortgage was obtained in joint name as well. 
6. This jointly held asset is now being sold as part of the divorce and its going to be divided equally. 
The fact that you financially contributed more money to the expenses each month is irrelevant. If that was a deciding factor, then every primary breadwinner would automatically get the lion's share of the division of marital assets, and they dont because of the disparity in their financial contributions.  
On this issue, you lose. Stop fighting for the wrong reason and move on to the next issue outstanding. Sorry for not being more polite in how I responded to your question but this was a simple straight forward issue. I'm a court appointed economic mediator in several counties and if I was appointed by the judge hearing your matter, I would be equally blunt and direct with you on this issue.

Leonard R. Boyer · Answer

This is an equitable distribution state, so without knowing more facts, no one can provide a precise answer to your question. You need to retain an experienced matrimonial attorney to protect your interests in this matter. Pick the best attorney you can find and remember one rule:  a good attorney is generally never cheap, and a cheap attorney is generally never good so don't choose based on price. With modern technology, you can be represented by any high-quality attorney in New Jersey irrespective of geography.

James L. Arrasmith · Answer

In a divorce, the distribution of property typically follows the principle of equitable distribution, meaning assets are divided fairly, though not always equally. Since the first house was purchased solely with your funds before marriage, it’s possible that the proceeds from that sale could be considered separate property, especially if they were kept separate or not commingled with marital assets. However, once the money from that sale was used to buy the second home, which became a joint asset, the situation becomes more complex. 
 
Since both of you actively participated in decisions related to the homes, and the second house was purchased during the marriage, it’s likely that the proceeds from the sale of the second home will be treated as marital property. This means that, despite your larger initial contribution, your spouse may have a valid claim to a portion of the proceeds from the sale of the second home, especially because of the way the assets were mixed during the marriage. 
 
Ultimately, the court will evaluate various factors, including how the properties were treated financially, whether there were any agreements or understandings about property ownership, and each spouse's contributions. While your argument for a larger share based on your initial contributions is reasonable, your spouse’s claim that the second home is marital property could hold weight. It’s essential to present evidence supporting your position, and the court will likely aim to divide the proceeds in a way that is fair, considering both financial and non-financial contributions.

Q: Who gets the proceeds from the sale of the house in a divorce when initial purchase was from one spouse’s funds?