Valuing Real Property in Divorce

February 23, 2015

When a couple divorces, one of the biggest issues is the  division of the couple’s assets. Determining what happens to the family home is often the most important decision regarding property division. Homes or other real property are frequently the most valuable asset that a couple owns and are difficult to divide between the spouses. To decide how to best divide a marital home or other real estate in a divorce, the first step is to ascertain the value of the portion of the property to be divided between the spouses.

Valuing the Property

The first step in dividing the property is to determine its value as a whole. Courts will always give a divorcing couple the chance to discuss and agree upon property divisions on their own before the court will mandate what happens to property. However, if the spouses cannot agree on the fair market value of the property, several valuation methods are available:

• Tax assessed value – this method usually results in a value that is significantly lower than fair market value, and so is not given much weight.
• Appraiser – a real estate appraiser can value the real property. This method is fairly accurate, but costs a few hundred dollars.
• Realtor – a realtor can value the property for little or no cost, but this method is less accurate than using an appraiser, since realtors appraise houses and other property with the purpose of achieving the highest sale price.

After a fair market value is assessed, the value of any liens or mortgages on the property are subtracted, which gives the actual value of the property.

Identifying Marital Property

Under  Florida’s equitable distribution statute, only marital property is subject to division in a divorce. Generally, if property was acquired prior to marriage, it is considered separate property and is not subject to division. But, if that property has been commingled, or if both spouses are listed as owners on the title, it can be classified as marital property, subject to division in divorce.

If a house or other real property is held by both spouses in a tenancy by the entirety, the court will presume that it is marital property. If the property was acquired prior to marriage by one spouse only, it is  presumed to be separate property, even if both spouses live in the house. However, showing that the property was purchased with joint funds will overcome that presumption.

A piece of property purchased before marriage, otherwise presumed to be separate property, may be considered to be  partly marital property if marital funds were used to make mortgage payments. Similarly, if marital funds or labor were used to improve property purchased before marriage, it may be considered to be partly marital.

Once the court determines whether and what portion of the real property is classified as marital property, the court can then decide how to best divide that property.

Working out a division of real property can be one of the most significant decisions in a divorce, both financially and emotionally. If you are considering or currently undergoing a divorce, the advice of an experienced attorney can help you to make sure that property divisions are made as fair as possible. Please contact  West Palm Beach family law attorney William Wallshein for a free initial consultation.