Published on:

How to Determine if a Mortgage on a Piece of Non-Marital Real Estate is a Marital or Non-Marital Debt in Florida

In a divorce case, there are generally several issues that must be worked through. One of those issues is equitable distribution. While it may be easy to think of equitable distribution as the process that distributes marital assets, it is important to remember that marital debts must also be divided in equitable distribution. Keep in mind that, just because a piece of real estate is a non-marital asset, that does not automatically mean that the mortgage on that property is non-marital. You must be prepared to prove that the facts of your case demonstrate that the mortgage was non-marital and that the obligation for paying it back should not be included in your equitable distribution. To help in getting a truly fair equitable distribution, make sure that you have retained the services of a skilled South Florida divorce attorney who can help you get the distribution you deserve.

The divorce case of S.F. and T.F. was one that involved this type of dispute over the correct categorization of a mortgage. The spouses were married for nine years. During the divorce litigation, each spouse acknowledged the house located in an area of Pasco County called Mitchell Ranch was the husband’s separate property. The husband had purchased the home prior to the marriage and there was no mortgage on the property when he and S.F. wed.

While the spouses were married, they took out a $73,000 mortgage on the Mitchell Ranch property. According to the wife, all of the money was used to make improvements to the Mitchell Ranch house. The wife’s name never appeared on the note or on the property deed. At the end of the divorce trial, however, the judge concluded that the house was the husband’s separate property but that the mortgage was marital debt subject to equitable distribution.

The wife contested that decision on appeal and she won. Florida statutory law is clear that in order for an asset or debt to be non-marital, it must be “incurred by either party prior to the marriage” or be “incurred in exchange for such assets and liabilities.” One of the keys to determining whether or not a mortgage debt is marital one is to assess whether or not both spouses received financial benefit from the loan proceeds. The simple fact that both spouses signed the mortgage loan documents does not automatically prove that a mortgage loan is a marital debt. Many lending entities will require that both spouses sign mortgage documents as a means of protecting themselves in the event of a foreclosure. If you, as S.F. did, merely sign the loan documents but do not sign the note, then you “cannot be held liable beyond [your] interest in the property.”

So, in S.F.’s situation, she didn’t sign the note, her name wasn’t on the deed and she testified that she never received any benefit from the mortgage loan proceeds. Both spouses testified that mortgage funds were used to improve the Mitchell Ranch house. Based on all of those facts, there was no permissible basis for finding that the mortgage loan was a marital debt and it should not have been included in the equitable distribution.

Whatever type of divorce or family law issue you’re facing, Miami family law attorney Sara Saba is here to help. Attorney Saba has been providing helpful legal representation for her clients for more than 13 years. Our team is dedicated solely to meeting your family law needs. Contact us online or by calling (305) 450-8009 to schedule your consultation. Hablamos Español.

More blog posts:

Equitable Doesn’t Always Mean Equal: The Rules of Marital Property Division in Florida, Miami Divorce Lawyer Blog, Sept. 17, 2018

Calculating the Marital Portion of Passive Appreciation of Non-Marital Property in a Florida Divorce, Miami Divorce Lawyer Blog, April 16, 2018