Many potential clients contemplating divorce wonder if they are entitled to the proceeds from the sale or refinance of their marital home since it was purchased by their spouse prior to their marriage. Often these potential clients have been told by their spouses that their marital home is their spouse’s separate property since it was purchased prior to the parties’ marriage and that therefore the potential client will not receive any proceeds from a sale or refinance of the home. In situations where spouses have purchased real property prior to a marriage, but the other spouse has contributed marital funds to the property, Georgia courts apply the “source of funds” rule. Under this rule, a judge or trial court must determine the contribution of the party who brought the home to the marriage and weigh it against the total nonmarital and marital investment in the property. Therefore, if a spouse has contributed marital funds to reduce the mortgage debt and/or increase the equity of the marital home, that spouse is entitled to an equitable share of the net increase in the equity in the marital home attributable to marital funds. However, the spouse who seeks an equitable division of the net increase in the equity of the marital home should be aware that there must be evidence of the appreciation of the property in relation to its fair market value during the marriage. Accordingly, if a spouse can prove that he/she contributed to the increased fair market value of the marital residence, for example, by contributing his/her income to the mortgage payments or improvements to the property, he/she has a legal right to receive an equitable share of the net increase in equity due to his/her contribution. This is the case even though the marital home was purchased by the other spouse prior to marriage. For further information regarding your legal rights and what you’re entitled to in a divorce, contact The
Faucette Law Firm, LLC today at (770) 485-6620.