Question: When a couple divorces and they own their residence, how is the property divided?
Answer: Who gets the property and how it is divided depends on a number of circumstances surrounding when and how the property was acquired, the obligations of each spouse and whether or not there are children living at home.
Property: community or separate?
Consider a property that was acquired by either spouse while they were married. This property is community property, unless the couple clearly states their intention to own individual interests in the property. [Calif. Family Code §760]
However, real estate is treated as separate property when it is acquired:
- before marriage; or
- after marriage as a gift or inheritance. [Fam C 770(a)]
Just because a home is treated as separate property doesn’t mean the owner gets to automatically keep 100% of the home upon a divorce (or profits from the home if it is an income-producing property).
For example, when the spouse contributes money from their own funds to improve their spouse’s separate property or make mortgage payments on the property, the situation becomes complicated and may be decided by a judge. For example, the spouse of the separate owner may be awarded money to cover their investment in the separate property. [Fam C §2640(c)]
On the other hand, community property is divided equally when a couple divorces. [Fam C §2550]
Since you can’t exactly cut a home in half, how does a judge decide how to divide community property?
Dividing community property
A judge considering how to divide up community property may have the owners:
- sell the property and split the profits;
- defer the sale of the property; or
- give ownership of the property to one person, granting the other an equal share of other community assets.
The couple has a say in which route the judge chooses, but it’s up to the judge to determine which route is most fair (especially when children are involved) and economically feasible.
For example, the parent who receives primary custodial care of a child (or children) may request the deferred sale of the property until the child graduates high school. The judge needs to determine whether it’s economically feasible for the parent(s) to keep up with the costs of mortgage payments, repairs, homeowners’ association (HOA) fees, insurance coverage, etc. after their finances change post-divorce. [Fam C §3801(a)]
When the judge determines it is economically feasible to defer the sale of the home for the duration requested, they will consider whether it’s necessary to limit the burden to the child residing in the home. The judge will consider:
- how long the child has lived there;
- how old the child is;
- where the home is located in relation to their school or childcare facility and the resident parent’s place of work;
- whether the home has been specially modified to accommodate a disability of the child or resident parent;
- the child’s emotional attachment to the home;
- whether the non-resident parent will be able to find suitable housing;
- the tax consequences of deferring the sale; and
- the negative financial consequences of deferring the sale for the non-resident parent. [Fam C 3802(b)]
Property in a different state
When the property is located in another state, the judge will divide the property in a way that it isn’t necessary to change the individuals’ interests in the property. This may be accomplished by selling the property and splitting the proceeds, or by one individual keeping the property and “paying out” the other with other assets. [Fam C §2660(a)]
Editor’s note — When a couple signs a prenuptial or postnuptial agreement specifying how property is to be treated in case of divorce, the agreement set forth in that document will likely prevail. [Fam C §2550]
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