Equitable Distribution of Real Property

New York State is an equitable distribution state which means that marital property, property acquired during the marriage, is equitably distributed. Equitable does not necessarily mean 50/50, but rather a fair distribution.

If there is real property titled to both spouses then that property is subject to equitable distribution. 

The most common form of title held by husband and wife is tenants by the entirety, if a husband and wife buy property together and title is not specifically notated in the deed then the default is automatically tenants by the entirety. Because of the rules governing tenancy by the entirety, a matrimonial court can not order the sale of property being held by said title unless it also alters the legal relationship between the parties. What this means is that before the court can order that the property be sold, it must award a divorce, separation, annulment or declare the nullity of a void marriage.

Since a court can not order that property held by husband and wife as tenants by the entirety be sold until the divorce is finalized, the order to sell property is often included in the final judgment of divorce. If the parties are unable to settle on a satisfactory resolution to the real property the court will subject it to equitable distribution. If the spouses do not wish to proceed to trial they can settle on the distribution of the real property; common settlements include the property being sold and the proceeds being split evenly between the spouses, one party agreeing to refinance the mortgage and buy the other spouse out, exclusive occupancy of one spouse in the property for a period of time, etc. See Kahn v. Kahn.

If the divorce proceeds to trial the judge will determine how the property is to be distributed. It is important to note that equitable does not mean a 50/50 split, but rather a fair split of the property. For example one spouse had a lot of personal debt that was paid with marital income while the other spouse had no debts, the spouse with no debt paid out during the marriage may get a larger split of the property division. 

The court may also award exclusive occupancy of the property to a spouse. An award of exclusive occupancy is generally awarded only in cases where the property is needed as a residence by a custodial parent and a minor child or children. SeeWobser v. Wobser, 91 A.D.2d 826, 458 N.Y.S.2d 113 (4th Dept. 1982). In these types of cases, it is proper to award exclusive occupancy where the need of the custodial parent and children to use the premises outweighs the non-custodial parent's interest in obtaining immediate access to his or her equitable share of the proceeds that would be realized from a sale. Hillmann v. Hillmann, 109 A.D.2d 777, 486 N.Y.S.2d 87 (2nd Dept. 1985);

However, exclusive occupancy does not divest the other spouse from title, there will be a time frame for the occupancy and eventually the property will be sold and divided per the judgment of divorce. Ex. Wife is custodial parent of two minor children, ages 10 and 17. Wife is granted exclusive occupancy of the property until the youngest child reaches the age of 18, husband and wife split the mortgage payments during that time. Once the child reaches the age of 18 the property should be sold and the proceeds divided between the parties.

If the property is only owned by one spouse and that spouse acquired the property before marriage then that property is considered separate property and cannot be transformed or transmuted into marital property, subject to equitable distribution, by the efforts and contributions of the non-titled spouse. McKinney's DRL § 236(B)(1)(d)(1), (B)(5)(b). I.e. Even if the non-title spouse contributed to upkeep and mortgage payments it does not make that property marital property.

However, appreciation in value of separate property, from the date of the marriage to the date of commencement of the divorce action, can be considered a marital asset subject to equitable distribution if the appreciation is due to the contributions or efforts of the non-titled spouse. McKinney's DRL § 236(B)(1)(d)(3). I.e. Non-titled spouse contributes to property renovations and property value increases by $50,000.00 then that appreciation in value becomes marital property and is subject to equitable distribution. 

Equitable distribution is complex and you should consult with a experienced attorney so that your interests are properly secured. 

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