If a married couple gets divorced, and one of the spouses owned their home before the marriage, the house is part marital property and part nonmarital property.
The value of the house at the time of the divorce can be divided into several categories:
(1) the equity the owning spouse had in the home at the time of the marriage (nonmarital);
(2) the amount the couple paid off on mortgage principal while living together as husband and wife (marital);
(3) the appreciation in the value of the house over the course of the marriage that can be attributed to the owning spouse’s premarital equity (nonmarital);
(4) the appreciation in the value of the house over the course of the marriage that CANNOT be attributed to the owning spouse’s premarital equity (marital); and
(5) the increase in value of the house that can be attributed to home improvements that the parties made during the marriage (marital).
Most of the time, the components of the house’s value cannot be objectively determined or fixed without either the reasonable compromise of the spouses or the expertise of a neutral appraiser.
This is great information. People often mistakenly believe that what they have owned before the marriage falls outside of any divorce agreement. It can come as quite a shock to them to find out otherwise.