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Michigan Family Law Blog

Friday, September 16, 2016

Premarital Equity and Divorce in Michigan

I am a divorce lawyer in the Rochester area of Oakland County, Michigan.  One issue that often comes up in relatively shorter term marriages is how to divide any premarital equity in the marital home where one of the parties owned the home before the marriage.  The matter of Boras v Boras, COA 328616, July 21, 2016 (Unpublished), provides an example of how the court typically handles such a situation.

In that case the parties were married for about seven years before filing for divorce.  The husband (H) owned the house before the marriage.  When the wife (W) moved in after the marriage, H signed a quitclaim deed transferring the home into both parties' names.  H claimed that the court should award him the premarital equity in the home as his separate property and divide only the equity gained during the marriage between the parties.  W claimed that the quitclaim deed and the fact that H paid off a premarital equity loan during the marriage, required the court to divide all of the equity in the home.  The court found that the premarital equity line of credit was used to purchase furniture for the home and was not associated with an increase in the value of the home.  Further, there was no evidence that the deed was intended to transfer any premarital equity to W.  The court decided to divide only the marital equity in the home and awarded the premarital equity to H.  W appealed but the Michigan Court of Appeals found that there was not reversible error.

This approach in relatively short-term marriages is pretty typical.  It also has some fairness to it, one person established the equity prior to the marriage so that party should be awarded the equity.  Once the parties are married, all income is considered marital and the same should hold true for any increase in the value of the marital home after the date of the marriage.


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