Passive Real Estate Appreciation in High-Asset Matrimonial Litigation


The persistent issues of the Covid-19 pandemic have decimated real estate as vacancies have risen, net operating income has dropped significantly in the past year, and transaction velocity within certain sectors has slowed. This situation poses an interesting and timely question for married individuals with ownership interests in real estate and who are considering divorce, especially in equitable distribution states like New Jersey and Florida: Is now the optimal time to file?

The drop in operating companies’ bottom lines could work in the propertied spouse’s favor, as lower values could mean distributing less to one’s spouse in the divorce settlement.

However, the law is not exact as to how to quantify and distinguish between active and passive appreciation related to real estate assets for purposes of determining the distribution of the marital value. Indeed, courts stress that “[f]lexibility must be the byword in determining which approach is…

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