When it comes to dividing property in a divorce or separation, real estate, particularly the family residence, is often the largest asset that will need to be divided. It can also be the most emotionally charged asset, especially in longer marriages where one or both sides have an attachment to the house.
Fortunately, the California Family Code provides a lot of guidance on exactly how this should be done.
How much is the house or property worth?
The first step in dividing any real estate, marital home or otherwise, is almost always to first determine its value. To do this in a way that will hold up in court, you will likely need an independent appraisal. If you and your soon-to-be ex are able to agree on one appraiser that you both accept, this can speed things up and save some money by allowing the two of you to split the cost. If you can’t agree, then each of you will need to conduct your own appraisal.
After that step is completed, the two sides will ultimately settle on a current value for the house and then move on to options to fairly divide it.
How is the equity divided in a divorce?
Before you can clearly divide the home accurately, there is one very important question that the law asks: who is on title as the legal owner? Depending on the answer, how the equity is divided can vary.
Scenario 1: Both you and your spouse are on title as the legal owner.
When both spouses are on title, there are really only 3 ways to divide a single piece of real estate, like a family residence:
- You purchase your spouse’s interest in the property;
- Your spouse purchases your interest in the property; or
- The property is sold, and the proceeds are divided between the two of you after payment of taxes, escrow fees, agent’s commission, and any other related expenses.
In this scenario, with both individuals on title, it is common for the proceeds to generally be split equally, with 50% of the funds distributed to each party, although there are a few very important exceptions that usually relate to whether somebody contributed “separate property” funds to the house or not.
For a more detailed explanation of the difference between “separate property” and “community property”, click here.
Scenario 2: Only one spouse is on title, but mortgage payments were paid during marriage.
When only one spouse is on title, it is possible that only that spouse is entitled to receive the entire value of the property. However, if any mortgage payments were made on the house from money earned during the marriage, then the calculation becomes a little more complicated.
In this case, the spouse who is not on title will still have an interest, but it may not be 50%. It could be anywhere between 0% and 50% and will most likely require a forensic accountant to figure out exactly how much it is. This forensic accountant will consider several factors in their analysis, including things such as when the marriage began, when the property was purchased, at what price, how many mortgage payments were made during marriage, and the source of funds used for those payments.
In general, while the exact analysis can be complicated and varies, the more mortgage payments that were made during marriage the greater the interest the off-title spouse could have in the home or property.
If you would like to learn more about how to divide real estate or other large, stationary assets, or just get more information on the process to ensure you get everything to which you are entitled, contact our law office today.
In these complex cases, your side of the story matters
The courts expect the spouses to do the work of digging through the paper trail of the business and explaining the significance of what is found. Numbers, just like relationships, are often open to interpretation. When fighting for your right to a business, it’s important to share your side of the story with documentation to back it up.
Hiring the right attorney for the job can make all the difference in these complex cases, so reach out to us today if you’re struggling with dividing a business!
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