When a home was paid for partly with one spouse’s separate money and partly with marital money, Georgia treats it as part separate and part marital, in proportion to what each contributed. This is the “source of funds” rule, endorsed in Thomas v. Thomas, 259 Ga. 73 (1989).
How the Rule Works
In Horsley v. Horsley, 268 Ga. 460 (1997), the Georgia Supreme Court explained that “the house is not to be considered as a single unit, but as two separate units – one nonmarital and one marital.” The spouse who brought the home to the marriage keeps a share matching his or her separate investment’s share of everything invested in it. The rest is marital and is divided equitably.
A Worked Example
In Hubby v. Hubby, 274 Ga. 525 (2001), the husband paid $80,500 of his own money down on a $145,500 home, and marital funds later paid down $4,568 of mortgage debt. At the divorce the equity was $117,085. His down payment accounted for 94.6%, so $110,762 of the equity was his. The other 5.4%, or $6,322, was marital and subject to division.
The trial court had given him the whole house because a refinancing had reduced the equity. The Supreme Court reversed, holding that a refinancing does not prevent division and that the house did not have to be sold first.
The Rule Needs Values
The rule needs evidence of what the home was worth. In Horsley, the husband had bought the house 23 years before the marriage, and the couple paid the mortgage down by $5,033. On those facts alone, the trial court gave him 61%. The Supreme Court reversed because the trial court never determined the home’s fair market value at the start of the marriage or at its end.
If the owner instead puts the other spouse’s name on the deed, a different rule applies, as our post on separate property becoming marital explains.
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This post is a quick overview of the law and is not intended as legal advice. Please feel free to contact our office for a consultation if you have questions about this or any other legal aspects regarding your case!