Second, In many instances, mortgages are refinanced after marriage, second mortgages and home equity loans may also be incurred. These new debts may erase or partially erase a non-marital interest.

Third, the formula does not consider the effect that capital improvements made during the marriage have on the real estate value. Capital improvements that are made during the marriage and which increase the value of the real estate may erode some of the non-marital interest represented by the Schmitz formula.

Often, presenting a persuasive property case depends on clear cut documentation, and expert testimony. The Minnesota State Bar Association includes a Schmitz Formula Calculator on their web site to determine non-marital interest. Use this calculator only while understanding its limitations as set out above. important to consult with a lawyer regarding significant non-marital issues.

Dividing the Asset.

Once Marital versus non-marital interests are determined, the parties may discuss a division of the asset.

It is important to recognize that being named on the title and being named on the mortgage represent two very different interests. A person whose name appears on a title is considered the legal owner to any person seeking to purchase the property. A person whose name appears on the mortgage, however, has no ownership interest in the real estate and simply has a responsibility to pay the the debt secured on the homestead.

Often parties seek to have their name removed from the title believing that doing so will mean that they are no longer a debtor on the mortgage.

That is not correct.

With that said, there are many ways to divide the homestead or , more precisely, the homestead equity in a divorce.

Occupancy/Ownership by one. If the real estate is awarded to one of the parties, the other party must be compensated for their share of the marital equity. This compensation may take one of several forms.

• Award of Other Assets. Try to think of the property division as a spread sheet with three columns. In the first column, list the asset. In the second column list the value of the asset awarded to the husband and in the third column the value of any assets awarded to the wife. If on party is awarded the real estate, their column will reflect the marital equity awarded to them. This may be offset by other assets awarded to the other party.

• Refinance Mortgage. When one party is awarded real estate, the other party may remain obligated on any mortgage, second mortgage or home equity loan if they were a signor on the loan. As a result, in most instances the real estate mortgage must be refinanced to remove the other party's name. As part of that refinancing, the party that is awarded the real estate may seek additional funds to pay off the other parties' equitable interest.

• Pay Off Over Time. A party's interest may also be paid out over time with or without interest abs negotiated between the parties. This is usually only used when there are no other assets that can be used to equalize the property division. The pay off amount and period may depend on the respective incomes of the parties. Sale and Division of Proceeds. When no other assets are available to equalize the division of property and the parties are either unable to afford the real estate or unable to refinance the real estate, the property may be sold and the proceeds divided.

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