Divorce and the marital home in Florida

Equitable distribution: the starting point is equal

In a proceeding for dissolution of marriage the court sets apart to each spouse that spouse's nonmarital assets and liabilities, and in distributing the marital assets and liabilities it must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors (Florida Statutes § 61.075).

One of those factors is about the house. The statute lists the desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, when it would be equitable to do so, it is in the best interest of the child or that party, and it is financially feasible for the parties to maintain the residence until the child is emancipated or until exclusive possession is otherwise terminated by a court (Florida Statutes § 61.075). In making that determination, the court first determines whether it would be in the best interest of the dependent child to remain in the marital home and, if not, whether other equities would be served by giving any other party exclusive use and possession of it (Florida Statutes § 61.075).

Is the house a marital asset?

Marital assets include assets acquired during the marriage, individually by either spouse or jointly by them. Nonmarital assets include, among others, assets acquired by either party prior to the marriage, and assets acquired separately by either party by noninterspousal gift, bequest, devise or descent, including real property so acquired for which legal title has not been transferred to the parties as tenants by the entireties (Florida Statutes § 61.075). All real property held by the parties as tenants by the entireties, whether acquired before or during the marriage, is presumed to be a marital asset, and the burden of proof is on the party who claims that the property, or some portion of it, is nonmarital (Florida Statutes § 61.075).

When a home is nonmarital, the marital side can still include the enhancement in value and appreciation that results from the efforts of either party during the marriage or from marital funds, and the paydown of principal of a note and mortgage secured by nonmarital real property, with a portion of any passive appreciation, if the mortgage is paid down from marital funds during the marriage (Florida Statutes § 61.075).

The cut-off date for determining which assets are marital is the earliest of the date the parties enter into a valid separation agreement, another date that agreement expressly establishes, or the date of the filing of a petition for dissolution of marriage; the date for determining value is the date or dates the judge determines is just and equitable under the circumstances (Florida Statutes § 61.075).

Assets acquired by either spouse after the date of the marriage and not specifically established as nonmarital are presumed to be marital, but that presumption is only for evidentiary purposes and does not vest title: title to disputed assets vests only by the judgment of a court (Florida Statutes § 61.075).

Option one: sell the house

For a homestead, the Florida Constitution says that the owner of homestead real estate, joined by the spouse if married, may alienate the homestead by mortgage, sale or gift, and that if the owner or spouse is incompetent, the method of alienation or encumbrance is as provided by law (Florida Constitution, Article X, § 4). The statute adds that a spouse's joinder in a deed, with the sole purpose of conveying homestead real property to someone other than the other spouse or both spouses jointly, does not change the character of the property being conveyed, or of the proceeds of its sale, to marital property (Florida Statutes § 61.075).

In cases of estates by entirety, the tenants, upon dissolution of marriage, become tenants in common (Florida Statutes § 689.15).

In Orange and Osceola counties, a standing temporary order of the Ninth Judicial Circuit, signed December 18, 2019, is used and complied with immediately upon the filing of contested dissolution of marriage actions, except in cases where there is a written agreement by the parties to the contrary. The order is binding on the petitioner upon the filing of the action and on the respondent upon service of the order, and it remains in force until further order of the court, such as the entry of a final judgment, a dismissal, or a subsequent temporary order, whichever occurs first. Under it, neither party may conceal, damage or dispose of any asset, whether marital or nonmarital; neither party may dispose of any asset other than in the customary conduct of business and personal affairs; and neither party will pledge, encumber or mortgage any assets except by written consent of the parties, by order of the court or as the order itself provides (Ninth Judicial Circuit, Administrative Order 2004-05-05).

On the federal tax side, the IRS says that a person who meets certain conditions may exclude the first $250,000 of gain from the sale of a home from income, an exclusion that is increased to $500,000 for a married couple filing jointly, and that a person who was separated or divorced prior to the sale can treat the home as his or her residence if he or she is a sole or joint owner and the spouse or former spouse is allowed to live in the home under a divorce or separation instrument and uses it as his or her main home (IRS Publication 523).

Option two: one spouse buys the other out

To do equity between the parties, the court may, in lieu of or to supplement, facilitate or effectuate the equitable division of marital assets and liabilities, order a monetary payment in a lump sum or in installments paid over a fixed period of time (Florida Statutes § 61.075).

A conveyance of real estate, including homestead, made by one spouse to the other conveys the legal title to the grantee spouse in all cases in which it would be effectual if the parties were not married, and the grantee need not execute the conveyance (Florida Statutes § 689.11). The Supreme Court's approved form for a marital settlement agreement says that the form does not act to transfer title to the property, and that such transfer must be done by deed or supplemental final judgment (Florida Supreme Court Approved Family Law Form 12.902(f)(2)). A judgment distributing assets has the effect of a duly executed instrument of conveyance when the judgment, or a certified copy of it, is recorded in the official records of the county where the property is located (Florida Statutes § 61.075).

The Consumer Financial Protection Bureau says that a divorce decree or property settlement may allocate debts to a specific spouse, but it does not change the fact that a creditor can still collect from anyone whose name appears as a borrower on the loan or debt, and that taking a name off a home's title does not take that name off the mortgage. In the Bureau's words: “While state laws vary, you are generally responsible for a debt unless you were contractually released by the creditor or your former spouse refinanced the loan and removed your name” (Consumer Financial Protection Bureau).

For the assessed value of a homestead, there is no change of ownership when legal or equitable title is changed or transferred between husband and wife, including a transfer due to a dissolution of marriage (Florida Statutes § 193.155). The IRS says that, generally, a person who transferred a home, or a share of a jointly owned home, to a spouse or ex-spouse as part of a divorce settlement is considered to have no gain or loss; however, if the spouse or ex-spouse is a nonresident alien, then the person who made the transfer likely will have a gain or loss from it (IRS Publication 523).

Option three: keep it jointly for a time

Among the factors for distribution, the statute names the desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, until the child is emancipated or until exclusive possession is otherwise terminated by a court of competent jurisdiction, on the conditions quoted above (Florida Statutes § 61.075). After a dissolution of marriage, the tenants of an estate by entirety are tenants in common (Florida Statutes § 689.15).

While the case is open: disclosure

Florida's rule on mandatory disclosure applies to all proceedings within the scope of the family rules except those it names: adoption, simplified dissolution, enforcement, contempt, injunctions for protection against domestic, repeat, dating or sexual violence or stalking, and uncontested dissolutions when the respondent is served by publication and does not file an answer; and, except for its provisions on child support guidelines worksheets, any portion of the rule may be modified by order of the court or agreement of the parties (Florida Family Law Rule of Procedure 12.285). Where it applies, any document it requires for an initial or supplemental proceeding must be served on the other party within 45 days of service of the initial pleading on the respondent, and the documents include all deeds evidencing any ownership interest in property held at any time during the last 3 years (Florida Family Law Rule of Procedure 12.285).

The broker's role under Florida's license law

A real estate licensee may act as a transaction broker or as a single agent, and may not operate as a disclosed or nondisclosed dual agent; all licensees are presumed to be operating as transaction brokers unless a single agent or no brokerage relationship is established in writing (Florida Statutes § 475.278). A transaction broker provides a limited form of representation to a buyer, a seller, or both in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent (Florida Statutes § 475.278).

The duties of a transaction broker include the following seven: dealing honestly and fairly; accounting for all funds; using skill, care and diligence in the transaction; disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer; presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing; limited confidentiality, unless waived in writing by a party; and any additional duties that are mutually agreed to with a party (Florida Statutes § 475.278). That limited confidentiality prevents disclosure that the seller will accept a price less than the asking or listed price, that the buyer will pay a price greater than the price submitted in a written offer, of the motivation of any party for selling or buying property, that a seller or buyer will agree to financing terms other than those offered, or of any other information requested by a party to remain confidential (Florida Statutes § 475.278).