Real estate is often the most valuable property that married couples share with one another. Both your primary home and any vacation or investment properties will substantially increase your personal wealth. Real property usually comes with major financial obligations as well, such as the requirement to maintain homeowners insurance on the property and to pay taxes. There is also the physical maintenance of the land and any improvements on it which can be quite expensive.
Couples facing divorce in California likely understand that community property laws will force them to divide their portfolio of real property. What are some of the possible solutions for real property in a California divorce?
Having one spouse retain ownership
Arguably the most common solution for homes actually occupied by the married couple is for one spouse to stay in the home. They will likely have to refinance it both to withdraw equity for their spouse’s compensation and to remove the other owner from the deed.
Typically, both the spouse who keeps the house and the spouse who does not will receive a fair share of the equity they have accrued in the property during the marriage.
Selling the home
Maybe neither spouse can qualify for a mortgage without the income of the other, or perhaps neither spouse wants to live in the home that they shared after the end of the marriage.
Couples can agree to list the property for sale and divide the proceeds appropriately as part of the property division settlement in their divorce. Judges can also order the sale of the marital home and any investment properties that you own.
Arranging for joint ownership
In rare cases, divorcing couples may realize that they want to continue owning the home together. Maybe there are several major remodeling projects not yet completed that will drastically increase the sale price of the property. Perhaps the couple wants to try a birdnesting custody arrangement where they alternate living at the home with the children to minimize co-parenting disruptions for the kids.
They might even view the home as an investment property that they could rent out to others so that they can use the money to provide their children with a better standard of living. Such arrangements typically require carefully drafted contracts to protect the interests of the spouses involved.
You and your ex can potentially reach any of these decisions on your own. If you litigate, judges will usually either choose to award the home to one spouse or to order the sale of the property. Understanding what happens with your biggest assets during property division proceedings and what solutions you can negotiate can help you pursue the best outcome in your upcoming divorce.
