Understanding sweat equity

One of the reasons property is considered marital property under South Carolina law is that both spouses have contributed money towards purchasing it. So you might think that if you have property that your spouse never paid for or contributed any money into, it cannot be divided in your upcoming divorce. However, under equitable distribution, a judge may still divide up property if your spouse put sweat equity into the property.

Sweat equity is a term used in the business and real estate worlds. As explained by Bankrate, sweat equity is the time and effort an individual invests into something. In the case of a house, a person contributes sweat equity by working to improve the property. This can include painting the house, installing gutters, or engaging in a cleanup project. Any of these activities may increase the value of a piece of property.

Whether your spouse put sweat equity into a home or another piece of real estate you own is important because it may factor into whether your spouse has a claim to a share of that property. The South Carolina Bar website explains that, for instance, when dividing equity from a home, a judge in the state may consider financial contributions made by the spouses or if the spouses put in any sweat equity. If so, the equity will be divided between the spouses as the judge determines.

Sweat equity can be a complicating factor for other properties such as businesses. If a spouse owns a business and the other spouse is not a co-owner or has any kind of ownership, the other spouse might still lay some claim to the business if the other spouse contributed any kind of physical help towards it. These are important questions that may be brought up with legal counsel if you believe your spouse had contributed some form of sweat equity to one of your properties or possessions.