How could this be? From a property law (as opposed to matrimonial law) perspective it makes no sense. After all, when a married couple purchase real estate together the resulting form of title known as “tenants by the entirety” prescribes ownership by each of the parties of an overlapping whole interest in the property. This overlapping ownership of the “whole pie” is what keeps a judgment creditor from foreclosing its judgment lien against the residence, since the other “innocent” spouse’s interest cannot be separated out.
The answer to how a jointly owned home can end up unequally divided in a divorce, lies in the case law interpreting the Domestic Relations Law which seeks to preserve separate property rights in the face of jointly titled home ownership. Separate property is property that, despite a divorce judgment in which all other property is split up, one of the spouses gets to keep without sharing with the other spouse. It is narrowly defined by statute, and includes property owned by one of the parties prior to the marriage, property received as a gift or inheritance during the marriage, and property (money) received as compensation for personal injuries during the marriage. Usually, separate property only remains separate when a spouse keeps it titled in his or her separate name. For example, if you combined bank accounts into joint checking and savings when you got married, you cannot get the money you contributed back in a divorce even where you contributed most of the money into those joint accounts. The monies are considered “commingled” and no longer separate.
However, in the limited circumstance of separate property investment into real property, the opposite is true. For example, when one spouse walks into the marriage with a large bank account and keeps that account in his or her sole name until that happy day when the happy couple purchase a home together using those funds as the down payment toward the purchase, the spouse who contributed those funds can expect — even without a pre-nuptial agreement – to walk away from a divorce recovering all of that initial investment before his or her spouse gets a dime from the proceeds of the sale of the home. Only the actual amount of the separate property investment is recovered – there is no interest, nor pro rata appreciation that works to enhance the invested monies.