Florida Supreme Court Rules That Passive Appreciation A Marital Asset

Divorce1.jpgIn a unanimous decision, the Florida Supreme Court overturned two lower court decisions and ruled that passive appreciation – the increase in a home’s value caused by inflation and market forces – is a marital asset in Florida, and is entitled to be shared by a divorced spouse who contributed to the mortgage or upkeep on the home during the marriage.

The case involved a Hillsborough County couple, Joseph and Katherine Kaaa, who divorced in 2007. In their divorce case, a judge denied Katherine an award for passive appreciation on a home she and her husband shared in Riverview. Her husband had purchased the home prior to their marriage for $36,000. During the marriage, Katherine had contributed to the mortgage payments and enhancements to the home, which was worth $225,000 at the time of their divorce.

The judge granted Katherine over $18,000 for her share of the enhancements to the home, but refused to award her passive appreciation. The Second District Court of Appeals in Lakeland upheld that judge’s decision.

However, the Florida Supreme Court ruled that passive appreciation is a marital asset, since the property appreciated during the time the funds used to maintain it belonged to both spouses, and that Katherine had made contributions to the home. The court returned the case to the lower court to determine how much Katherine should get according to the new guidelines outlined in the opinion.