In California, one of the most common questions that arises when it comes to divorce is, who gets the house? When couples divorce, they often tie deciding who gets to house to child custody, financial arrangements, and negotiations for other marital property. So if the ex-spouses do not agree, things can escalate quickly. And so can the legal bills.
If you and your ex-spouse are trying to decide what to do with your family home, here are some money-saving tips to consider:
Tip #1: Figure Out Who Owns What
In California, there is a legal presumption that any property purchased during the marriage is community property, meaning owned by the spouses jointly. Separate property is anything acquired by one spouse before the wedding, by gift or inheritance during the marriage, or after the parties separate. If the family home is community property, the divorcing partners share equal interest in that real estate. If it is separate property, only the owner-spouse has an interest.
Generally, after determining ownership, the parties may sell the residence and split the profits. Alternatively, one spouse may take full ownership and buy out the other spouse’s interest which is usually done by a cash-out refinance on the property.
Tip #2 Always Check Your Title
Sometimes one or both parties believe that the family home belongs to the ex-spouses jointly; however, it is prudent to conduct a a title check to confirm this belief. If the title only lists one spouse as the owner, there is a legal presumption that the house belongs solely to that spouse. To overcome this presumption, the non-owner spouse must show that the parties had an agreement or an understanding that both spouses would own the home jointly. Alternatively, the title presumption may be overcome by a showing that community funds were used to purchase the property or pay down the principal on the loan on the property. See In re: Marriage of Moore, (1980) 28 Cal. 3d 366 and In re Marriage of Marsden (1982), 130 Cal.App.3d 426.
Tip #3 Don’t Forget The Mortgage
If one spouse is maintaining ownership of the family home, the parties must figure out what happens with the mortgage as well. Most often, this means that the owner-spouse will refinance the mortgage to pay off the old loan and replace it with another loan solely in their name. In return, the non-owner spouse will sign over their ownership interest in the property. The spouse who takes the property usually takes on the cost-basis taxable consequences, which means that when the spouse who takes the property eventually sells the property, this spouse will incur taxes for the increase in the property value.
Tip #4 Check To See If You Are Entitled To Reimbursement
Even if the title reveals that only one spouse owns the home, the non-owner spouse may still have a reimbursable property interest. If the non-owner spouse used community or personal funds to make improvements or mortgage payments, the court will likely calculate that spouse’s interest based on those contributions and order reimbursement. The court also may order reimbursement if the non-owner spouse continued to make mortgage payments during the couple’s separation.
Tip #5 When Children Are Involved, The Court May Not Allow The Sale
When it comes to the divorce, the family home, and small children, the court may not immediately allow the parties to sell the house. Instead, the court may order a temporary delay on the sale of the home, called a deferred sale, to minimize the impact of the divorce on the kids. . In determining whether a deferred sale is appropriate, the courts will look to the financial impact, the age and school grades of the children, how long the children have lived there, whether the home has been modified to accommodate a child’s disability, and the proximity of the house to the children’s school, childcare, and other activities. (See Family Code ”3801-3802).
Tip #6 Hire A Lawyer
Navigating the ins and outs of property ownership can often be the most confusing part of a divorce. But we can help. Contact the Bay Area Family Law Center or you may call us at (925)258-2020 and let one of our certified family attorneys go over your options with you today.
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