DISSOLUTION OF MARRIAGE: EQUITABLE DISTRIBUTION: PASSIVE APPRECIATION OF MARITAL HOME THAT IS NONMARITAL ASSET

Kaaa v. Kaaa, ___ So. 3d ___, 35 Fla. L. Weekly S521 (Fla. 9/30/10)

“[T]he passive appreciation of a nonmarital asset, such as . . . [a] marital home, is properly considered a marital asset [if] marital funds or the efforts of either party contributed to the appreciation.”  “[I]t is the passive appreciation in the value of the home that is the marital asset, not the home itself. . . .  ‘[I]mprovements or expenditure of marital funds to a nonmarital asset does not transform the entire asset into a marital asset; rather, it is only the “enhancement in value and appreciation” which becomes a marital asset.’  . . . .  [T]he trial court must make a finding of fact that the non-owner spouse made contributions to the nonmarital property during the course of the marriage.  While these contributions need not be strictly monetary and may include marital funds or the efforts of either party, they must enhance the value of the property.”

“Because paying the mortgage is a prerequisite to enjoying the appreciation in value of the marital home, we conclude that principles of equity do not allow an owner spouse to receive the full benefit of the passive appreciation when the nonowner spouse contributed to the property, and marital funds were used to pay the mortgage.  Such inequities must be balanced by the trial court making specific factual findings regarding the contributions of the nonowner spouse and the relationship of those contributions to the passive appreciation of the property.”

“In sum, when a marital home constitutes nonmarital real property, but is encumbered by a mortgage that marital funds service, the value of the passive, market-driven appreciation of the property that accrues during the course of the marriage is a marital asset subject to equitable distribution under section 61.075(5)(a)(2), Florida Statutes (2007).”