Aug. 18, 2025
Who Keeps the House? Tracing Separate and Marital Property in North Carolina Equitable Distribution
For many families in Greensboro, the house isn’t just where life happens—it’s the biggest asset on the table when a marriage ends. Can your entire future really hinge on a single address? If you’re in the middle of a split, the answer often feels like “yes.” So, what happens when both spouses want to keep the keys, or when neither is willing to walk away without a fair share?
The truth is, North Carolina’s rules for who keeps the house are far from simple. “I paid for it, I keep it” almost never applies. Instead, the court will dig into the details, tracing every dollar and deciding to separate what’s “marital” from what’s “separate.” The outcome depends not on who deserves it most, but on how your property was acquired, how it was used, and whether you can prove your claims when it matters most.
The Real Question: What Counts as Marital and Separate Property in NC?
Understanding how property is categorized is the foundation of equitable distribution in North Carolina divorce. The court’s responsibility is to ensure a fair, not necessarily equal, division of property and debt. This starts with placing every asset into one of two categories:
Marital Property
This generally includes all assets and debts acquired from the date of marriage to the date of separation, regardless of whose name appears on the title or deed. According to N.C. Gen. Stat. § 50-20(b)(1), homes purchased during the marriage or paid for with marital funds are typically considered marital property—even if only one spouse is listed as the owner.
Separate Property
This refers to assets owned by a spouse prior to marriage, as well as inheritances and certain gifts received individually. However, separate property can lose its status if it is commingled with marital assets. For example, if premarital funds are deposited into a joint account and used for marital expenses or improvements, those assets may become marital property unless they can be clearly traced.
Tracing Contributions
Tracing is the legal process by which the court determines where the money originated to acquire, improve, or maintain property—especially when marital and separate assets have become intertwined.
For example, a townhouse was purchased before the marriage. During the marriage, joint funds are used for renovations and to pay down the mortgage. In this scenario:
- The original premarital equity may remain separate property if clear documentation is available.
- Any increase in property value resulting from marital contributions—such as renovations or mortgage payments from joint accounts—is typically treated as marital property and divided accordingly.
- If the property was refinanced in both spouses’ names, or both contributed to payments, each may have a claim to a share of the home’s equity.
In court, providing detailed records—such as mortgage statements, bank transfers, and receipts—is crucial. When documentation is unclear or incomplete, courts often classify the asset as marital property to ensure a fair outcome.
Commingling–When Separate Property Becomes Marital
One of the most common and costly mistakes people make during a marriage is unknowingly commingling separate property with marital assets. This may occur by adding a spouse to a deed, using joint funds for major repairs, or refinancing a home together. Under N.C. Gen. Stat. § 50-20(b)(2), if separate and marital funds become so mixed that their origins are unclear, the entire asset may be deemed marital property.
If you wish to keep property separate, maintain clear records and avoid mixing funds. If you are unsure whether commingling has occurred, an experienced divorce attorney in Greensboro, NC can help you assess your situation and develop a legal strategy.
Passive vs. Active Appreciation
One of the more nuanced challenges in North Carolina divorce cases involves determining who benefits from the increased value of a home. The law distinguishes between passive appreciation and active appreciation.
Passive appreciation refers to an increase in property value that occurs solely because of external factors—such as rising real estate markets or general inflation—without any effort or investment from either spouse. For example, if a house owned prior to marriage becomes more valuable simply because the Greensboro market has surged, that increase is generally classified as the separate property of the original owner.
Active appreciation, on the other hand, is the result of direct contributions made during the marriage. This includes using marital funds for renovations, paying down the mortgage with joint income, or investing significant time and labor into home improvements. Any increase in value attributed to these efforts is typically considered marital property, subject to equitable distribution between both spouses.
Facing Divorce in Greensboro? Call Us.
If you are facing divorce and want to protect your rights in the marital home, trust Mercedes O. Chut, P.A. for results and integrity. Don’t leave your most valuable asset to chance; contact us today for the support and advocacy you deserve.
