Posted by Nydia Streets of Streets Law in Florida Divorce
When one spouse purchases a home using funds earned prior to the marriage, is that spouse entitled to a credit in a Florida divorce for those funds? This issue arose in the recent appellate case Erdman v. Erdman, 5D18-3043 (Fla. 5th DCA September 13, 2019) in which the former wife appealed the trial court’s decision to award the former husband more than 50% equity in the marital home based on the former husband’s claim that the down payment on the home came from funds he earned prior to marriage.
The parties were married in 2007. The former husband testified at the parties’ divorce trial that he contributed an $80,000.00 down payment to the marital home using funds he received during the marriage from his former employer for his services prior to the parties’ marriage. The former wife argued the payment was a gift to the marriage and the former husband did not present any evidence other than his aforementioned testimony that the payment was not a gift. Despite, this, the trial court characterized the $80,000 as the former husband’s separate property and thus awarded him more than 50% of the value of the marital home. In valuing the home, the trial court used an appraisal dated closer to the date the former husband filed his petition for divorce rather than an appraisal performed closer to the trial date. The former wife appealed on both the valuation issue and the characterization of the former husband’s contribution to the marital home as his separate property.
The appellate court agreed with the former wife and found it was error for the trial court to award the former husband more than 50% of the marital home’s value based on his purported contribution of non-marital funds. The court held, “‘All real property held by the parties as tenants by the entireties, whether acquired prior to or during the marriage, shall be presumed to be a marital asset." § 61.075(6)(a)2., Fla. Stat. (2016). To overcome this presumption, the party asserting that the subject property, or a portion thereof, is a nonmarital asset has the burden of proving that no gift to the other party was intended. If the subject property is jointly titled, and the parties' conduct during the marriage demonstrates joint ownership, the party asserting that no gift was intended must do more than make an ‘unsubstantiated claim, raised for the first time during a dissolution proceeding.’ Further, ‘[i]t is irrelevant how the funds were received or how much each party contributed.’ Here, Former Husband failed to prove that the $80,000 down payment on the jointly titled marital home was not intended as a gift to Former Wife. His testimony alone that the down payment was made with nonmarital funds was insufficient to overcome the marital gift presumption.” (internal citations omitted).
The appellate court also found error in the date the trial court chose to determine the value the marital home. The court held, “In May 2016, the marital home was appraised at $192,000, but in February 2017, three months before trial, it was appraised at $220,000. The record does not reflect that this $28,000 increase arose from any source other than market forces. The trial court awarded Former Husband the marital home, and thus he received the entire value of the passive appreciation. We find that this resulted in an inequitable benefit to Former Husband, such that the trial court abused its discretion in valuing the home based on the May 2016 appraisal rather than the February 2017 appraisal, which was completed closer to the date of trial.” Generally, the court held, when a marital home appreciates in value due to the efforts of either spouse from the time a petition for dissolution is filed, the value on the filing date should be used. But when the value increases due to passive forces, the value closer to or on the date of the final hearing should be used.
Equitable distribution in Florida is sometimes a complicated matter. This is why it is best to consult with a Miami divorce lawyer to understand how your marital assets and debts may be divided. A consultation can give you an overview of how the specific circumstances of your case may determine how a Florida divorce court will review your case.