Dividing a House in Divorce
One of the most contentious issues in a divorce is ownership of the family home. It’s quite understandable, considering that a house is often the largest asset owned by spouses.
Ownership of the House
The first step to dividing a house in divorce is classifying which portion is community property.
We have previously discussed the concept of community vs separate property. There exists a presumption that property acquired by a married person during the marriage, while domiciled in California, is community property.
Community property means that the property is owned together by the spouses, and each have a share in the property. In the case of property division in divorce, community property must be divided between the spouses absent a buy-out.
The same rule applies to a house. If a house was bought during the marriage, while the parties were living in California, then it is presumed that the house is community property. Being community property, each spouse has a share in the house, and the property will be divided between them in divorce proceedings.
Sometimes it’s not so easy to tell who owns the property at first glance. There may be instances where title to the house is only in the name of one spouse, even if the house was bought during the marriage. In instances like this, evidence can be presented to the court to prove the real intent of the spouses – was it really intended that they should both have a share in the house, or did one spouse intend for the other spouse to own the house wholly?
Separate property refers to properties bought or acquired by a spouse before the marriage. If a house was bought by a spouse before getting married, then it is considered the separate property of the spouse who originally bought it, and will not be subject to division in divorce.
That’s not to say that all separate property is exempt from division. The other spouse may earn an interest in the separate property if he or she contributed to the mortgage payments or upkeep of the home. In this case, the house may be subject to division to satisfy the share of the other spouse who contributed to the home.
Having tackled the issue of ownership, we will now take up the issue of property division. What are the parties’ options if they both have a share in the house?
Sale of the House
The most straightforward option for the spouses is to sell the house and divide the profits between themselves. This often happens when neither spouse can afford to buy out the other, or if the upkeep is too much for just one spouse.
Buying Out the Other’s Share
If a party can afford to buy out the share of the other party, then a buy-out will avoid the complications forced by a sale or deferred sale. A buy-out may be more advantageous if a party holds special significance for the house, provided that he or she has the financial means to afford it.
Buying out the other spouse’s share has many implications. Tax consequences have to be taken into consideration. If the house is still subject to a mortgage, it will be necessary to remove the name of the other spouse from the mortgage.
Deferred Sale of Home Order
In this third option, the sale of the house is postponed through a deferred sale of home order. The use and possession of the house will be temporarily awarded to the parent who has custody of the children in the meantime.
The following factors matter in the court’s decision to order a deferred sale of home:
- The length of time the child has resided in the home
- The child’s placement or grade in school
- The accessibility and convenience of the home to the child’s school and other services or facilities used by and available to the child including child care.
- Whether the home has been adapted or modified to accommodate any physical disabilities of a child or a resident parent in a manner that a change of residence may adversely affect the ability of the resident parent to meet the needs of the child
- The emotional detriment to the child associated with a change in residence
- The extent to which the location of the home permits the resident parent to continue employment.
- The financial ability of each parent to obtain suitable housing.
- The tax consequences to the parents
- The economic detriment to the non-resident parent in the event of a deferred sale of home order.
- Any other factors the court deems just and equitable.