When people get married, they move in with each other. This usually means buying a house together. The down payment on the house is usually non-marital (they just got married). The down payment for that house is not always evenly split between the two parties. If the couple later divorces, does the party who paid the entire down payment or the bigger share of the down payment get a credit for that down payment when the court divides their marital assets?
How Illinois Courts Divide Marital Assets
The first thing an Illinois divorce court does is distinguish between marital and non-marital property.
“The court shall make specific factual findings as to its classification of assets as marital or non-marital property, values, and other factual findings supporting its property award.” 750 ILCS 5/503(a)
Marital property is any property acquired by either party after the wedding and before the entry of the divorce judgment.
“‘[M]arital property’ means all property, including debts and other obligations, acquired by either spouse subsequent to the marriage” 750 ILCS 5/503(a)
“For purposes of distribution of property, all property acquired by either spouse after the marriage and before a judgment of dissolution of marriage or declaration of invalidity of marriage is presumed marital property.” 750 ILCS 5/503(b)
Marital Houses vs. Non-Marital Down Payments In An Illinois Divorce
If a house was purchased after the wedding, that house will be marital property and can be divided by an Illinois divorce court.
An Illinois divorce court “shall divide the marital property without regard to marital misconduct in just proportions” 750 ILCS 5/503(d)
The down payment on the house if it came from money earned before the wedding is non-marital property.
“[N]on-marital property” [is] property acquired before the marriage” 750 ILCS 5/503(a)(6)
Non-marital property stays with its original owner after an Illinois divorce.
“[T]he court shall assign each spouse’s non-marital property to that spouse.” 750 ILCS 5/503(d)
But, the non-marital down payment money got mixed up with the marital house. Is it all marital now and, thus, all divisible?
If you’re the spouse who paid the non-marital down payment, you are going to want that down payment to be considered non-marital. If you are the spouse who did not provide the down payment, you are going to argue that the down payment is now an immutable part of the marital house and is, therefore divisible.
Arguing For A Credit For The Down Payment Of The House In An Illinois Divorce
The house, if purchased, after the wedding, is marital and thus divisible. But that doesn’t mean the marital property is going to be split 50/50.
“While the distribution need not be mathematically equal, it must be equitable.” Marriage of Roberts v. Roberts, 2015 IL App (3d) 140263 – Ill: Appellate Court, 3rd Dist. 2015
You will be arguing that the value of the house should be split in “just proportions” because you contributed to the acquisition of the house and it’s increase in equity (by reducing the mortgage by the amount of your down payment).
“[E]ven if petitioner thought that this distribution was overly generous to respondent, there were additional equities to support the division, in that the evidence showed that respondent was responsible for the bulk of the down payment for and improvement to the residence.” In re Marriage of Tabassum, 881 NE 2d 396 – Ill: Appellate Court, 2nd Dist. 2007 (emphasis mine)
An Illinois divorce court “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors, including:
(1) each party’s contribution to the acquisition, preservation, or increase or decrease in value of the marital or non-marital property” 750 ILCS 5/503(d)(1)(emphasis mine)
“A party’s greater financial contribution might support a disproportionate property award in favor of the contributing spouse.” In re Marriage of Brill, 87 NE 3d 302 – Ill: Appellate Court, 2nd Dist. 2017
It’s not just a suggestion in furtherance of fairness. The Illinois Marriage and Dissolution of Marriage Act requires it even if the non-marital “estate” gets mixed up (“transmuted”) with the marital estate.
“When one estate of property makes a contribution to another estate of property,…the contributing estate shall be reimbursed from the estate receiving the contribution notwithstanding any transmutation” 750 ILCS 5/503(c)(2)
In the case of a non-marital down payment for the purpose of buying a home with a mortgage, there’s even more statutory support that the down payment MUST be returned to the party who paid it.
“[T]he following, which is known as “non-marital property”:…all property acquired by a spouse by the sole use of non-marital property as collateral for a loan that then is used to acquire property during the marriage; to the extent that the marital estate repays any portion of the loan, it shall be considered a contribution from the marital estate to the non-marital estate subject to reimbursement” 750 ILCS 5/503(a)(6.5)
What is a down payment if not “the collateral for a loan that then is used to acquire property during the marriage”?
Even before the Illinois Marriage and Dissolution of Marriage Act, common law provided for a credit for downpayments paid against marital home. Everett v. Everett, 185 NE 2d 201 – Ill: Supreme Court 1962
Just prove the down payment’s source…and you should get it back in a divorce.
My experience is that you get the nominal amount alone back. An Illinois divorce court will not give you a greater share of the increase in value of the house just because you paid the down payment. The equity less the down payment will be divided based on other things.
Arguing Against A Credit For The Down Payment In An Illinois Divorce
If your spouse paid the down payment for your house you have a small chance to convince the court that the down payment should not be credited to the payor in an Illinois divorce.
First, the down payment has to be proven to have come from a non-marital account. Proof of a non-marital down payment is usually shown by presenting the court with a bank statement when the money came out of the non-marital account.
“[I]t is the parties’ obligation to present the court with sufficient evidence of…[nature of] the property [and its value]” In re Marriage of Smith, 114 Ill. App. 3d 47, 54 (Ill. App. Ct. 1983)
Reimbursement to a non-marital estate is only permitted if proven by “clear and convincing evidence.” After 7 years, digital bank records are usually erased along with the evidence of the bank transfer that was the house down payment.
Reimbursements of down payments are allowed “provided, that no such reimbursement shall be made with respect to a contribution that is not retraceable by clear and convincing evidence” 750 ILCS 5/503(c)(2)
Without evidence of the down payment contribution, it gets real fuzzy what portion of the property is marital and what is non-marital. If there’s a question about what kind of property it is, the default answer is always “marital.”
“Any doubt as to the nature of the property must be resolved in favor of the finding that it is marital” In re Marriage of Steel, 2011 IL App (2d) 080974
If the down payment is clearly traceable, your only argument is that the down payment was a “gift” to the marriage. Reimbursements to a non-marital estate aren’t allowed if the contribution was a gift.
Reimbursements to a party’s non-marital estate are allowed “provided, that no such reimbursement shall be made with respect to a contribution… that was a gift[.]” 750 ILCS 5/503(c)(2)
“A valid gift requires proof of donative intent” In re Marriage of Schmidt, 610 NE 2d 673 – Ill: Appellate Court, 4th Dist. 1993
Who can testify to the gift giver’s “donative intent?” Only the alleged gift giver…who is definitely going to say “I presumed I’d get that money back.” But, who knows…you could get a surprise answer in a deposition.
Unfortunately, no one ever memorializes with a note saying, “This down payment is a gift to my lovely wife.”
Most Illinois divorce lawyers say “in my experience, judges give you the down payment back” but few divorce lawyers can tell you why that is. Please hire a divorce lawyer who knows the “what”, the “why” and, most importantly, the “how.” We are few and far between.
If you would like to talk with a lawyer who loves explaining “why”, contact my Chicago, Illinois family law firm to schedule a free consultation with an experienced Illinois divorce attorney.
