A Home Owned Before the Marriage: Separate vs. Marital Property Basics in New Jersey

A home you owned before the wedding isn't automatically shared in a New Jersey divorce, and it isn't automatically protected either. New Jersey's equitable distribution law reaches property acquired during the marriage, and when the court divides property it also weighs "the income or property brought to the marriage or civil union by each party" and what each spouse contributed to the value of the marital property (N.J.S.A. 2A:34-23 and 2A:34-23.1). Whether any part of your home is shared is a legal question for your attorney, and the answer usually turns on the paper trail.

I'm Dennis Mark Interdonato, a REALTOR® and Master CDRE® with The Dennis Mark Group at Keller Williams Realty Ocean Living. I'm not an attorney, and I don't take a side on whose house it is. What I can do in a divorce home sale is show you what the statute says, help you pull the right documents and give both of you the same value to work from. This is general information, not legal, tax or lending advice.

What does New Jersey law say?

Two sections of the statute do most of the work.

What can be divided. N.J.S.A. 2A:34-23(h) lets the court make an equitable distribution of property "legally and beneficially acquired by them or either of them during the marriage." It also says property one spouse acquired during the marriage by gift, devise or intestate succession isn't subject to equitable distribution, except that gifts between spouses are.

What the court weighs. N.J.S.A. 2A:34-23.1 lists the factors a court considers. Among them:

• The duration of the marriage
• The income or property brought to the marriage by each party
• Any written agreement made before or during the marriage about how property would be divided
• The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property
• The present value of the property
• The debts and liabilities of the parties

The statute also creates a rebuttable presumption that each spouse made a substantial financial or nonfinancial contribution to the acquisition of income and property while married. Under the Civil Union Act, the same sections apply to civil union partners.

Why isn't "it was mine first" the whole answer?

Because a lot can happen to a house during a marriage. These are the facts your attorney is likely to ask about:

• Whose name is on the deed now. If a spouse was added after the wedding, ask your attorney how that's treated, since the statute makes gifts between spouses subject to distribution.
• Who paid the mortgage. Payments made during the marriage, and where the money came from.
• What was improved. An addition, a kitchen, a roof, and who paid for each.
• Refinances and home equity loans. When they happened and where the money went.
• How the value changed. One of the listed factors is each spouse's contribution to appreciation in value, so expect questions about what work was done and when.
• Any prenuptial agreement. A written agreement made before or during the marriage is one of the listed factors.

What paperwork should you pull now?

New Jersey's Case Information Statement, the financial form used in divorce cases, asks for each asset's date of purchase or acquisition and, if you claim an asset is exempt, the reason and the value of what's claimed exempt. Start gathering:

• The deed and the closing statement from when you bought the home
• A mortgage statement from around the wedding date, and a current one
• Any refinance or home equity paperwork
• Receipts, contracts and permits for improvements, with dates
• Any prenuptial or postnuptial agreement

I'm a former New Jersey home builder and residential remodeler. I can walk the house with both of you and list what was built or updated, so the record is complete. What that work means legally is your attorney's call.

How is the home valued?

The present value of the property is one of the statute's factors. I prepare a market evaluation from recent comparable sales that both of you, and your attorneys or mediator, see at the same time. If your attorneys want a formal appraisal, I can give the appraiser the property details and recent sales. Who orders it, what date the value is measured from and who pays are decisions for your attorneys, your mediator or the court. Start with a home value.

Does owning it before the marriage change the taxes?

It can change how your ownership time is counted. IRS Publication 523 says that if you owned the home before the marriage and after the divorce or separation, and your former spouse isn't allowed to live there under a divorce or separation instrument, you can count all the time you owned it, alone or jointly with your spouse. You still have to meet the residence requirement yourself. Here's how the home sale exclusion works in a divorce.

If the house moves from one spouse to the other as part of the settlement, there's also a state fee question. Here's when a deed between spouses is exempt from New Jersey's realty transfer fee.

Where is the case handled in Monmouth and Ocean County?

The NJ Courts say to file in the county where the two of you last lived together. Monmouth County's courthouse is in Freehold, and Ocean County's is in Toms River. The statute is the same in both counties. What differs is the history of your house.

What are the most common mistakes?

• Assuming the deed settles it. Title alone doesn't decide what's divided.
• Throwing out old closing papers. The purchase date and price are the starting point.
• Refinancing or changing the deed mid-divorce without talking to your attorney first.
• Waiting until the settlement to get a value. Everyone negotiates better from a real number.

Frequently Asked Questions

Is a house I owned before the marriage protected in a New Jersey divorce?

Not automatically. The statute covers property acquired during the marriage, and the court also weighs the property each spouse brought into it and each spouse's contribution to its value. Your attorney applies that to your facts.

Does adding my spouse to the deed change anything?

It can. N.J.S.A. 2A:34-23 makes gifts between spouses subject to equitable distribution. Ask your attorney how it applies to your deed.

What if the house went up in value during the marriage?

Each spouse's contribution to appreciation in value is one of the factors in N.J.S.A. 2A:34-23.1. Records of what was done to the house, and when, help your attorney answer it.

What should I bring to my attorney?

The original deed and closing statement, mortgage statements from the wedding date and today, any refinance papers, improvement records and any prenuptial agreement.

This is general information, not legal, tax or lending advice. Only your attorney can tell you how New Jersey law applies to your home.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• Read the divorce home sale guide
• What comes out of the proceeds at a divorce closing
• What will my home sell for?
• Have a question this didn't answer? Send it to Dennis Mark.