A 2024 decision says once again that evidence of the costs of improvements on a separate property house does not prove the amount the property’s value was enhanced because of the improvements. The court in Vasquez v. Bailey, No. 03-22-00290-CV (Tex. App. – Austin, 4/25/2024)(mem. op.) stated:
Although Father introduced evidence about the costs of the various renovations to the San Marcos Residence, “evidence of the cost of improvements alone is not sufficient to prove enhanced value.” Rather, that “enhancement value” is determined through evidence showing the fair market value of the property in its improved condition at the time of dissolution compared to the fair market value of the property if the improvements had not been made. “Thus, it is not sufficient for the party seeking reimbursement to prove that the value of property has simply increased over time; the party seeking reimbursement must prove that the enhanced value of the property ‘was actually due to the renovations’ or other improvements.”
The court did consider evidence of the original value of the San Marcos Residence at the time Mother purchased the property before the marriage ($57,250) and appraisals of the property at the time of dissolution of the marriage ($155,100, $160,000, and $190,000). But those appraisals addressed the fair market value of the improved San Marcos Residence, rather than analyzing the hypothetical fair market value of the San Marcos Residence if the renovations had not taken place. Father argues that Mother conceded the hypothetical value of the San Marcos Residence when she stated at the July 26, 2019 hearing that she believes the San Marcos Residence would be worth “at least $130,000” if it was in the unrenovated condition. However, Mother‘s statement regarding her opinion on the hypothetical value of the San Marcos Residence occurred in response to a question about the value of the San Marcos Residence “today,” that is, the date of the hearing, not the date of the dissolution of the marriage. Moreover, when asked for the basis of her opinion, Mother explained that there are “very few properties for sale, there’s very few, even just empty lots,” that she is neither a real-estate agent nor an appraiser, and that she does not own any other real estate. Father has failed to demonstrate there was sufficient evidence to support his reimbursement claim based on the value of the improvements to the San Marcos Residence under Section 3.402(d)(2)‘s “enhancement value” approach, and therefore the trial court did not abuse its discretion in denying the reimbursement claim.
(citations omitted).
This case applied the pre-2023 reimbursement statute but the old law applied the “enhancement of value” measure to this type of reimbursement claim, so this opinion would apply to the new statute as well.