Divorce and Property Improvements in New York

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How is property divided in a divorce in New York?

New York is an equitable distribution state when it comes to divorce. This means that upon divorce, a court will examine up to thirteen different factors to determine the fair division of property accumulated during marriage.
In particular, a New York divorce court will distinguish between two types of property: marital and separate property. Marital property is broadly defined as all property gained by one or both spouses during the course of marriage. It will be subject to the equitable distribution analysis. In contrast, all other property, such as that acquired before marriage, is considered separate property and will be owned fully by the one spouse after divorce.  

In New York, are property improvements considered marital or separate property?  

Improvements to real property may include such additions as remodeling a room or installing new windows. They are usually physically attached to the property, and so a court must determine the monetary value of improvements in order to award reimbursements. A reimbursement may be calculated according to the cost of the improvement, or it can be based on the resulting increase in property value.
In a divorce setting, property improvements may either be treated as marital property or shared property, depending on the circumstances:
·        If martial funds have been used to improve one spouse’s separate property, any increase in value is deemed to be marital property. The marital estate is entitled to a reimbursement and the improvements will be credited equally between the spouses
·        Where one spouse has used their own funds and efforts to improve the other spouse’s separate property, they may be entitled to an individual reimbursement in proportion to their contribution
·        If one spouse has done nothing to contribute to the improvement, they are generally not entitled to the increase in value of the property
Note that in calculating reimbursements, a court will not only consider financial contributions, but several other factors as well. These may include such situations as changes in living expenses, for example if the family had to move out while the property was being renovated.   The valuation process can be rather specific to individual facts and will vary case to case. 

What if the property has simply increased in value over time?

New York distinguishes between property that has increased in value solely due to market forces and increases in value that result from improvements. 
The general rule is that if the appreciation in value was purely from market forces (i.e., the cost of the house went up due to market values), then the appreciation in value is deemed as separate property. If the appreciation in value resulted from the financial contributions of one spouse, then they may be entitled to reimbursements under equitable distribution rules.
In other words, if the spouse has done nothing to contribute to the increase in the other spouse’s property value, then they may not share in the profit increase. This is because New York discourages individual spouses from taking advantage of “passive increases” in property value upon divorce.  

Do I need a New York lawyer for a property improvements issue?

If there is a conflict over the cost of property improvements, it may be necessary to hire a lawyer. Property improvements can often involve a great deal of expenditure and toil on the parties involved. Therefore, any improvements to property should be thoroughly documented through the use of receipts, written descriptions, and photographs of the work. This will greatly assist the court in determining the cost of improvements and increases in the value of the property. An experienced New York lawyer can provided you more information if there is a legal basis for your case.

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Last Modified: 07-14-2014 09:42 AM PDT

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