Investing in a vacation home offers many returns, including a cost-effective option for making memories as a family. Unfortunately, divorce cases can force decisions about who gets the vacation home and how it is used.
The court will consider many elements when it comes to a vacation home and how this asset is managed in a divorce case. The first of these elements is whether the vacation home is a marital asset. An experienced divorce lawyer like the attorneys at Davis & Associates can help determine if you’ll get your vacation home in your divorce. Let’s explore how divorce can affect ownership of a vacation home.
Who Owned the Vacation Home First?
Did you own the vacation home before you got married? The answer to this question can determine if you have rights to the vacation home in a divorce. The court evaluates how married couples purchase real estate when awarding assets. They’ll ask if your spouse purchased the home or inherited it from a family member. Just because you both used the vacation home during your marriage doesn’t guarantee your right to ownership in a divorce.
However, your spouse would need evidence that shows the purchase date or when they inherited it. You may have rights to the asset if they inherited it during your marriage. State laws apply to inherited property, and community property laws will apply. If inherited property is exempt from community property, you won’t gain rights to the vacation home.
Were Marital Earnings Used For the Vacation Home?
A vacation home financed via a mortgage by you or your spouse before the marriage may be marital property. All income you or your spouse earn during the marriage is considered marital earnings. The vacation home will be deemed marital property if you or your spouse used marital earnings to pay the mortgage or property taxes for this home.
The court may deem a vacation property as marital property if any marital earnings were used for the real estate. You would need proof that you used your earnings to pay for renovations, upgrades, or repairs during the marriage. This evidence can help you establish entitlement to the asset even if your spouse owned it before the marriage.
Was the Vacation Home Bought After the Wedding?
Marital assets are all assets purchased or accumulated during the marriage. A vacation home is a marital asset if you or your spouse bought it after the wedding. In a divorce case, you are both entitled to the home.
In the divorce, you and your spouse would need to decide how to divide your marital assets. One solution is to sell the vacation home and split the proceeds. You and your spouse could also decide to share the benefits of the vacation home. For this option, you and your spouse would have to create a schedule to share the asset. Couples who have children may opt to co-own the property to ensure their kids benefit more from the vacation home.
Finally, if co-ownership isn’t a possibility, the court may evaluate the market value of the vacation home and the marital home. If both parties will receive a fair share of the marital assets, they could award the marital home to one party and the vacation home to the other.
Do You Have a Prenuptial Agreement?
A prenuptial agreement helps couples secure assets before they get married. These agreements are beneficial for individuals who own a vacation home. In the agreement, they can retain ownership of the vacation home if their future spouse agrees. When this happens, the owner is less likely to lose the vacation home during a divorce.
However, some states do not enforce prenuptial agreements. It is important for you to review these state laws with your divorce attorney before you start a divorce case. If the prenup is nullified, you’ll need an attorney to negotiate on your behalf.
The Valuation and Ongoing Expenses
In a divorce trial, the vacation home is appraised. If the home’s value is higher than the marital home, the court may force the couple to sell it and split the proceeds. If the home was financed, the couple must pay off the remainder of the mortgage, and then split what is left over. Both parties would still be responsible for any outstanding property taxes.
An alternative option is a buyout. A buyout requires a spouse to pay the other half the market value of the property. If the buyout is accepted, the party retaining ownership is responsible for all ongoing expenses for the property. They must pay the property taxes, any additional mortgage payments, or the cost of any repairs.
Vacation Rental Homes and Judgements
Some couples use their vacation homes as rental properties. The location of the vacation home determines projected rental property earnings. In a divorce, any incoming proceeds from the rental property must be divided between both parties. If both parties retain ownership, they would also divide any future rental property earnings and property upkeep costs. They would also need a legal agreement that secures their rights and outlines their responsibilities.
The court will also consider any personal injury judgments incurred by the property owner. Both parties would remain responsible if they co-owned the vacation home. However, the court could assign responsibility to one party if the home was owned before the marriage. The judge may consider the additional factors when awarding ownership of the vacation home.
Vacation homes are the perfect home away from home, and many families purchase these properties in their favorite vacation spot. However, in a divorce case, the court must determine who owned the property in the first place and if they bought the home after the wedding. If they used marital earnings, the court will include the property in the marital assets. Once it is a marital asset, the court must determine who retains ownership. Consulting a divorce lawyer helps you determine if you will receive a vacation home in your divorce case.