Dividing The Home

The family home is often the most valuable asset in a divorce. Who gets to keep the home, or whether it is sold and the proceeds split between the two parties, can be a tough decision both financially and emotionally. If children are involved in a divorce, additional considerations will come into play as the court will look at the children’s best interests.

While determining whether to sell the house or let it go to one party, you need to address important issues, such as: does one of the parties want to keep the home post-divorce, how will the other party be reimbursed, where are kids going to live, how to determine the fair market value of the home, and what will be the tax implications for each party. Your Orange County divorce lawyer can help you address all these aspects objectively and provide you the right legal advice.

Who Owns the House?

At the time of dividing the house in a divorce, the first important question will be who own it. Only then you can begin to work on whether one of the spouses will keep it or should it be sold off. Ownership issue may appear clear-cut, but very often it is not.

Presumption of Community Property

Under California law, it is presumed that all property acquired during the course of marriage is community property (except when a spouse has received as a gift or inheritance). By law, all community property in a California divorce must be split equally.

In theory, the simplest situation can be that you and your spouse used community property finances to purchase your house after marriage, and the title to the house includes both your names. In this cases, both of you have an equal claim over the house, just like any other community asset.

In practice, however, the ownership of a house could be more complicated. In many cases, even though the house was acquired through community funds after marriage, the title names only one spouse. That creates a legal presumption that the house belongs only to the spouse who owns the title, and thus it should be treated as a separate property of that spouse.

In this situation, your Orange County divorce attorney can help you negate this presumption by proving that you and the other party had an understanding or agreement that even though the title names only one spouse, the house belongs to both. Rebuttal of the separate property presumption created by the title is never easy, but a skilled attorney can try to establish evidence that backs your claim.

House Acquire Prior to Marriage

In general, if you or your spouse acquired the house prior to your marriage, it will be treated as the separate property of the one who acquired it. But during the course of marriage, if the non-owner spouse contributes community funds to pay for the mortgage or renovation and maintenance of the house, the division becomes more complex.

The contributing spouse in this case can have a considerable interest in the house at the time of property division, particularly if the marriage has lasted for many years.

Ways to Divide a Community Property House

During your divorce proceedings, if it is determined that your family home is community property, both parties share the claim on it. The best way would be to arrive at a settlement with the other party through your divorce attorney as part of your overall property division. If an agreement is not possible, the court will issue an order on how the house gets divided.

Sell and Split the Proceeds

You and the other party may agree to sell the house and divide the sale proceeds. If neither you nor the other party wants to keep the home alone or is not in a financial position to afford it alone, this could be the most practical approach.

Buy the Share of the Other Party

If only one party wants to keep the house, they will have to buy out the share of the other party. If you are the buying spouse, you need to consider whether the mortgage on your home is ongoing. Your divorce lawyer in Orange County will advise you to refinance the property so that the other party’s name is taken off the mortgage.

To determine whether it makes financial sense for you to take full ownership of your home, you should carefully consider the costs involved. These may include the mortgage installments, the home insurance costs, property taxes, and the costs of utilities, maintenance, and repairs. Income tax implications, such as whether you will get a tax deduction for mortgage interest, should also be considered if you are buying the house.

In some cases, the property division agreement may include a provision that the mortgage payments are made by the selling spouse as part of alimony. In this situation, the selling spouse can get tax deduction on the monthly amount as alimony payment, while the buying spouse may still be eligible to get tax deduction on mortgage interest. Your divorce lawyer can help you obtain professional tax planning advice on these issues.

Deferred Sale of Home

When the divorce involves children, the Orange County family law court may issue an order to defer the sale of the house for some time. Under the “Deferred Sale of Home” order from the court, both parties will continue to be joint owners of the house for a prescribed period, while the custodial parent will be able to possess and use the home exclusively during this period. The court’s order is meant to uphold the children’s best interests.

Before issuing this order, the court will examine the income levels of the spouse and their financial capacity to make the remaining mortgage payments on the house. If it is determined that a deferred sale is a practical option, the court will then consider whether this order will benefit the children and reduce the impact of the divorce on their life. The deferred sale order will specify a fixed duration after which the spouses can sell the house.

Epstein Credits

If you have used your separate property money to contribute to mortgage payments on your marital home after your separation but prior to your divorce, the courts in Orange County can reimburse you for that amount under California law. Exceptions to this rule are:

• You and the other party had agreed that no reimbursement will made
• You made the mortgage payments as a gift
• You continued staying in the shared home and the value of monthly mortgage payments was about 50 percent in of the potential rental value of the house
• You made the mortgage payments as a form of alimony

Get the Right Legal Advice for Your Property Division in a Divorce

Your marital home is likely to be one of the prized assets in a California divorce. Seek legal advice from a trusted divorce attorney in Orange County who understands the intricacies of California family law and has experience in handling complex property division cases. Your attorney will not only protect your interests in the community home and property, but also guide you regarding the legal aspects of a home buyout or sale.