I am a divorce lawyer. My office is located in Auburn Hills, Oakland County, Michigan, close to the Rochester area, as well as Holly, Clarkston, Lake Orion and Oakland Township. In most cases I handle the parties own a home with some equity. Sometimes there are questions from one side or the other regarding how equity in the home should be divided. These questions typically revolve around issues such as one party owning the home before the marriage (premarital ownership), one party making the down payment on the home from separate funds (down payments), inheriting the home during the marriage, or only one party having his or her name on the deed to the home (titling issues).
When apportioning or dividing the equity in the marital home, will the divorce court consider such issues as premarital ownership of the marital home, inheritance of the home, down payments, or titling issues?
In most cases, once the married couple moves into the home and resides there as wife and husband, these issues will not be considered and the court will equally divide any equity in the property. Very basically, as the Michigan Court of Appeals concluded in McKissack v McKissack, COA 325099, March 15, 2016 (Unpublished), the act of moving into the home together during the marriage establishes the intent to contribute the entirety of any funds, inheritance, etc. so used “to the marital purpose of acquiring a new home.”
In McKissack, the husband owned what the court termed the “Crystal Valley property” prior to the marriage, he purchased it in 1975. The parties married in 1984, they never lived at the property. The husband sold the property via a land contract and keep the money in a money market account that was kept separate from the parties' other funds. In 2000, the purchaser paid off the Crystal Valley property with a check for $92,113. The husband used the funds to purchase CDs which yielded approximately $133,000. In 2005, the parties purchased the “Warner property” for $150,000, using the $133,000 from the CD accounts and borrowed funds. The parties lived together at the Warner property until 2010 when the wife moved out. At trial, the divorce court awarded the first $92,113 of equity in the Warner property to the husband as his separate property (the equity from Crystal Valley) despite the fact that the Warner property was the marital residence for 5 years.
The Court of Appeals reversed and ordered an equal division of the proceeds from the sale of the property. The Crystal Valley property and the proceeds from the sale were the husband's separate property initially, which he made great efforts to keep separate for a long time. However, despite those efforts, he eventually commingled the proceeds with the marital home. The court held that despite the fact that the $92,113 was “theoretically traceable as defendant's separate property, his actions after receiving the funds established that he intended to contribute those funds to the marital purpose of acquiring a new home.”
In the vast majority of cases, the court will equally divide the equity in the marital home regardless of premarital ownership, down payment, inheritance or titling. However, every case is different, if you have questions regarding a divorce in Michigan, please do not hesitate to contact me.