Although it might be presumed that a “house is a house”… when comparing the “marital residence” to a “vacation” home in the context of a NY divorce, that presumption is probably incorrect. Although the general rule is that a house purchased during the parties’ marriage is “marital property” and therefore subject to “equitable distribution” upon the couple’s divorce, separation or annulment, the primary marital residence and the vacation home may be treated quite differently by the Court at trial.
Houses qualifying as marital property are often ordered by the matrimonial Court to be sold in order to:
- Liquidate equity for division between parties
- Satisfy existing mortgages
- Reduce payment obligations for one or both parties
This is where differentiation between the primary marital residence and the vacation home may become important.
When determining what to do with a house, the matrimonial Court will consider the value of the property, when it was purchased, whether either party or both contributed “separate” or “premarital” funds to its acquisition or upkeep, and other facts and circumstances. If the house in question is the primary home of the couple and the couple has school-aged children, then the argument is often made to the Court that the marital residence’s sale should be delayed because of the overriding importance of the children’s stability, continuation in their school district, relationships with their friends and existing involvement in extracurricular activities, for example.
This “child centered” impact on disposition of the marital residence is almost never the case with “vacation” homes. A vacation home is most often treated in a much more matter-of-fact manner by the Court, generally more like the division of a bank account.
If a vacation home is ultimately determined to be a marital asset, the Court will consider its value (routinely established by a Court selected licensed appraiser), any separate property claims asserted by the parties and will likely order its sale. The proceeds are credited between the parties in percentages, determined by the Court at trial. These percentages are based upon the totality of facts and circumstances, other assets, debts and legal factors the Court may consider in its ultimate equitable distribution decision.
Before any trial in a matrimonial action, the parties have numerous opportunities to fashion a settlement between themselves and usually, since the parties are in a better position to decide how they wish to live post-divorce than a Supreme Court Justice, the disposition of the marital residence and a vacation home can be determined by the parties with assistance of counsel.
In settlement discussions:
- Neither party may wish to retain the vacation home and an agreement to sell it and divide the proceeds may result.
- One party may desire to buy-out the other party’s interest in the vacation home. If the value of that person’s interest in the marital residence is close to the value of the other person’s interest in the vacation home, it may be possible to “swap” respective interests, with one person walking away owning the marital residence and one person owning the vacation home.
This is a simplified example of course. Many settlement scenarios exist and will be dependent on the unique facts and circumstances of each case. However, even though both are intrinsically just houses, in settlement negotiations, the marital residence and the vacation home will need to be looked at differently, especially when children are involved.
DISCLAIMER: This article is intended to provide only general information for entertainment purposes and should never be relied upon as legal advice. One should seek the assistance of experienced matrimonial counsel to assist in explaining the law, options and making important decisions in any matrimonial matter.
Robert B. Pollack, Esq.
The Law Offices of Robert B. Pollack, P.C.
www.divorcelaw4u.com
nylawyer55@optonline.net
516-938-3330
