Posted by Nydia Streets of Streets Law in Florida Divorce

If non-marital property is sold during the marriage, and the proceeds are used to buy other property, does the newly-bought property become marital as well? The answer depends on if the funds were commingled with marital funds and/or the spouse to whom the property originally belonged gifted the property to the other spouse. This was an issue in the case Rivera v. Rivera, 3D22-1914 (Fla. 3d DCA August 2, 2023).

While the parties were married, the former husband inherited real property, but he did not receive control over the property until 2018 when the estate closed. In 2018, the parties separated and the former wife filed for divorce in 2019. The former husband moved into the inherited house, but was unable to make mortgage payments, so he sold the house while the divorce case was pending. He used the sale proceeds to purchase a home in his mother’s name and to purchase a vehicle for himself. The former wife argued the former husband should be held in contempt of the court’s status quo order, and that the assets acquired subsequent to the sale of the property should be classified as marital property. The trial court agreed with the former wife and the former husband appealed.

The appellate court reversed, noting “In this case, the property that the Husband inherited was non-marital. The trial court erroneously concluded that once the Husband sold the nonmarital property during the marriage or during the pendency of the dissolution, those proceeds became marital property subject to equitable distribution, relying on section 61.075(6)(a)(1)(a) setting forth that marital assets include ‘[a]ssets acquired . . . during the marriage, individually by either spouse or jointly by them.’ Applying the same reasoning, the trial court concluded that the used Toyota Camry that the Husband purchased with proceeds from sale of the non-marital house became a marital asset because those proceeds were acquired by him during the marriage, while the dissolution was pending, and in violation of the standing status quo order.”

The court concluded “Here, the house the Husband inherited from his grandmother did not lose its non-marital status when he sold it, and the proceeds from the sale of the non-marital property remained non-marital as there is no evidence in the record that the funds were commingled in any marital account. Further, the assets the Husband purchased with those non-marital funds are also non-marital, as those assets were ‘acquired in exchange for an asset from a bequest or a devise.’ § 61.075(6)(b) 2., Fla. Stat. (2020). Therefore, the assets obtained from the sale of the inherited property should also have been classified as non-marital.”

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