Hello, homeowners, people who might some day marry a homeowner, people who know people who own homes, people named “Malmquist” who stumbled on this blog post by accident while Googling themselves, and people who fit none of those previous categories but are just super nosy and/or really like blog posts. This article is for you!
Malmquist v. Malmquist is a 1990 Nevada Supreme Court case which lays out the math for what part of someone’s house they had prior to marriage, is now the property of the person who married the person with the house.
It’s super fun. The formula looks something like this:
CP = PD[cp] + [(PD[cp] + OL[cp])/(PP) X (A)]
Don’t know what any of that means? It’s cool, neither do 95% of family law attorneys in Nevada. That’s why other attorneys come to Family Law Solutions when they need a Malmquist analysis done, and why you should, too.
Let’s back up a bit first, though. Before you tackle that formula (or pay someone else to tackle it for you), you will want to make sure that it applies to you.
Malmquist is used to calculate the portion of the increase in equity of a residence that was owned prior to the marriage by one party when community funds have gone toward the residence.
Breaking that statement down into subparts, for Malmquist to apply to you, ALL of the following need to be true:
- Residence owned by one party prior to marriage;
- House has increased in value during the marriage; and
- Community funds have gone toward the residence (mortgage, repairs, etc.).
If you have a house and you want to keep it your house, even though you are going to get married, you have a few primary options.
- Get a Premarital Agreement that protects your home and keeps it your own (Family Law Solutions is good at those, too);
- Make sure you have invested in a bad house in a bad economy so your house will have less equity after marriage than prior to marriage (not recommended);
- Stay together forever so a divorce court never tries to touch your home (highly recommended, but not necessarily always practical); or
- Make sure you only put separate funds toward your home.
Separate funds are those you have prior to marriage that you never commingle (fancy word for mix together) with community funds, those from inheritance or certain types of personal injury settlement, and passive income derived from separate property.
So, for example, if you come into the marriage with a house and a bank account in just your name, and never put a paycheck or transfer money from a joint account into that account, hire a property management company and rent out the home, managing everything to do with the property from that one account, there’s a pretty good chance you can prevent your spouse from getting an interest in your house.
That’s not how most of these things go, and most people never have heard of Malmquist and are shocked and appalled when they find out that contributing community paychecks to pay for the mortgage every month for 10 years means that their spouse has gained a financial interest in a portion of the home.
So where do we come in?
- We can prepare a Premarital Agreement that will protect the entirety of your separate property home, or some portion less than all, depending on the wishes of you and your significant other;
- We can advise you prior to marriage regarding some of the possible outcomes with your home if you were to get married (at which point we will also recommend you get a Premarital Agreement, because YOLO);
- The attorneys at McFarling Law Group can represent you in your divorce and help guide you through the process of either reaching a fair resolution to your case with full knowledge of what the appropriate Malmquist calculation states, which aids in both settlement negotiations and trial if necessary; or
- We can prepare a report and calculation regarding the Malmquist interest in the property, either in a neutral capacity, or for either party, for a flat fee of $1,250 if you want us to have a date of marriage and current appraisal done, $1,000 if you provide the appraisals.
And where do you come in?
And if you ever want to pay an hourly rate to have a fun and exciting conversation regarding the intricacies of the mathematical formula, well I suppose that is an option, too. #YOLO
Speaking of heartwarming hashtags, enjoy some #MalmquistMemes (also pronounced #MalmquistMeeeeeeeeeeeeeeeeeeeeems):