Is the Separation Date or Divorce Date Used for the Value of a House?

by Wayne Thomas
Passive market fluctuations usually lead to real estate being valued on the date of trial.

Passive market fluctuations usually lead to real estate being valued on the date of trial.

Thomas Northcut/Photodisc/Getty Images

The marital home can be the most prized and contested item in a divorce. It is also an asset that can change value dramatically from the time the couple separates to the date of the divorce trial. Courts generally have discretion to use the date of separation or trial date to properly account for increases or decreases in the value of your home.

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Property Division Overview

When a couple cannot agree on who should get the marital home in a divorce, the court will decide based on state law. States generally give courts the authority to divide most assets accumulated during the marriage up to the date of separation. Assets acquired before the marriage and after separation are generally not divided and remain owned by the spouse that acquired them. Once the marital assets have been gathered, the court must place a monetary value on each item and allocate them between spouses in a fair or even manner, depending on the state.

Valuing Real Property

Establishing the value of real property is typically accomplished by submitting appraisals and through expert witness testimony at the divorce trial. The date the court uses to value the property is referred to as the "valuation date" and some states, including New York, give the court the discretion to use any date between the date of filing for divorce through the date of trial. Other states are more specific and use either the date of separation, date of divorce filing, or date of trial. However, these rules often contain a provision allowing the court to use a different date at the judge's discretion or for "good cause."

Passive Assets

Good cause often exists to deviate from the standard valuation date when the nature of the asset is such that it can fluctuate in value considerably from the date of separation through the end of trial. This fluctuation often occurs with real estate, and judges are faced with the issue of determining how to apportion any gains or losses accumulated during that time. If the increase or decrease in value was due to market forces alone -- such as with an untouched vacant lot -- the date of trial is usually used. This is because if the date of separation or date of filing were used, the spouse awarded the property would be unfairly given a windfall, rather than sharing equally with the other spouse in any passive increase or decrease in value.

Active Assets

However, if the increase or decrease in the value of the property during the divorce can be attributed to the actions of a spouse, courts are generally allowed to use the date of separation in setting a value. An example might be if the spouse that continued to reside in the marital home throughout the divorce made several improvements to the property or failed to maintain it after separation. Here, the gain or loss is viewed as the separate property of that spouse, and it would be unfair to have the other spouse enjoy or be burdened by these actions.