One of the most common questions we hear in our cases is in a divorce who gets the house. In many cases, your marital home can the the biggest asset that a couple owns. In addition, the issue of deciding upon your home carries huge emotional baggage for each party and has the added inconvenience of having to deal with a third party–the bank that loaned you the money to buy it.
When going through your divorce, you should get a complete understanding of all of the issues surrounding your home in order to determine whether you should fight for it in your case.
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Whose house is it?
Before you can decide whether you can keep the house, you need to figure out who owns it. Although most reasonable people would think this is a rather simple statement, it can actually be seriously complicated, depending on your situation. Is it entirely community property that should be divided equally or is it separate property, which would would result in one spouse owning it. Ultimately, your judge may have to make that decision.
Is it Community Property?
California law has a presumption that all property acquired during the marriage is “community property.” Basically, that means the residence would be owned by both spouses equally. The exception is if the house was given to one spouse through an inheritance or by a gift.
The typical situation is where you and your spouse purchased the home together during the marriage in both names, using money earned during marriage. In that case, the house is clearly community property and each of you will own it 50/50.
Other times, however, the purchase of the house can be more complicated. In California, many couples will put the house in the name of only one spouse. That could be because one spouse has bad credit and that bad credit would prevent the couple from borrowing money to buy the house. Usually, it doesn’t matter if the title was taken in the name of only one of you and it was purchased during marriage. In that case, it will still be considered community property.
Generally, unless there was an express agreement or understanding, the house will still be considered community property. But there are exceptions to that rule.
Is it Separate Property?
If your spouse purchased your home before your marriage, that home is generally your spouse’s separate property. In other words, you do not own the house. In some cases, however, you may have contributed to the mortgage payments or for improvements to the house during your marriage. When that happens, you will have an interest in the house. That interest can grow over time and be quite significant, especially in a long marriage.
If the house is your separate property, it’s highly likely that you will be able to keep the house should you divorce. It will be your spouse’s separate property if they purchased the house before you were married, received it as a gift or through a will upon a relative’s death. The same is true for you. Assuming it is your spouse’s separate property, you may be able to get some money out of your them, but it’s unlikely you will be able to keep it after you wrap everything up.
Again, it is possible that you could accumulate a part interest in the home if you paid off the mortgage with money either of you earned during your marriage.
What should I do if the home is community property?
Deciding what to do with your home, especially if you have children, can be one of the most difficult and emotional decisions you will make in your entire case. Do your best to remove most of the emotional aspects of the decision and make it purely a financial decision. In short, make certain that you have very good reasons for either keeping it, selling it or allowing your spouse to keep it. Several lawyers I know will advise you to keep the house no matter what. That’s probably an emotional rather than a financial decision.
In a divorce who gets the house
In your divorce, you will generally have three options if you are trying to reach a settlement about the house:
- One spouse buys out the community interest share from the other spouse and keeps it;
- The house remains in joint names for a limited period of time and is then sold to the other spouse or is put on the market; and
- The house is sold and the proceeds are divided.
Before you decide on any of these options, make sure to discuss them thoroughly with your Orange County divorce lawyer. Now, let’s look at each option.
Should I keep it?
You’ve lived in your house for the past 10 or 15 years. You’re raising or have raised your kids there. You have put your heart and soul into making it your family’s home for many years. And now, after all of these years, you have to decide whether you want to stay there. It’s a tough choice. Make sure you have good reasons, either way.
Don’t allow your hatred of your spouse be a reason for keeping the home from them. Spite or getting back at your spouse is not a good reason.
It’s always a tougher choice should you have school-aged children. Younger children can have a difficult time dealing with the fact that their parents are splitting up. You may think it will be easier for them to stay in the house after the split.
Some mental health professionals may advise you that providing the children the stability of continuing to live in their house and keep their own room may be beneficial for them during this time. They could be right. Remember, always think of your kids first during your divorce. Thus, having young children may be a really good reason to keep your house and not sell it or let your spouse take it.
Once you decide that you would like to keep it, the financial aspects of the transaction should control your decision. You will need to buy out your spouse and make all of the monthly payments for the house. That will include mortgage, property taxes, insurance and maintenance.
In short, can you afford to keep it? Be realistic about it. You may give up all of your rights to other assets in your settlement only to find that you can’t afford the financial obligations to stay in the house. Let’s look at the issues.
First thing that you’re probably going to have to do is take your spouse off of the mortgage and refinance the home. To do that, you will need to be able to qualify for a mortgage. Did you run a credit check? Do you have enough credit to do it? If you don’t have a job, it’s probably not going to happen. Even if you have a job, do you make enough money to qualify for the mortgage. You’ll need to make enough to be able to afford the mortgage.
It’s easy to find out if you can qualify. You’ll also need to consider the regular maintenance that the house requires, as well as any deferred maintenance that has gone by the wayside as the marriage deteriorated. Buying your spouse out of a home that is falling down around you may turn out to be a disastrous decision. Be sure to look at the long term issues when deciding in a divorce who gets the house.
Should we defer the sale of the house so I can continue to live there?
In many cases, you may just want to keep the house for a few years while your kids are in school. If you intend to keep the house for just a few years, continuing to hold it jointly with your spouse might make sense. That way you don’t have to refinance the debt to get their name off the mortgage and pay them their share of the equity, nor do you have to trade valuable assets for their equity.
Think about it, you can keep your same comfortable mortgage payments, you won’t have to pay costly refinancing expenses and you will both share in the appreciation.
In cases like these where you have custody of the minor children, deferring the sale of a family home until they graduate from high school may be a good idea. You can request the court order a Deferred Sale of Home Order also known as a “Duke” order from the case which created this right.
Quite simply, a Duke order is a temporary delay in the sale of a home and an award of temporary, exclusive use and possession of the family home for the custodial parent of a minor child.
Since it may be difficult for one party to simply buy the other party out of their equity interest in the home, the court could try to prevent the hardships that uprooting the custodial parent and the minor child might have on the children.
Requesting a Duke order will usually mean that you will have to pay for the entire cost of the mortgage and all of the other costs, which may have to come out of your spousal or child support. In making a decision about Duke orders, courts will examine the impact on your spouse of not having the equity in the home to use until you sell the house. As you can see, that impact can be substantial.
Therefore, obtaining a Duke order can be difficult, but if you see a compelling need to stay in the house with your kids, it may make sense to try.
Should I move out and sell it?
Once you’ve decided that you cannot keep the home, you and your spouse will need to try to sell it. Initially, you should try to agree with them on a real estate broker whom you both trust to handle the sale. Once you agree on an broker, have the broker go through the house to get a sense of the rooms you should improve in the house.
In a competitive market, you will need to make the house as marketable as possible and the best way to do that is to improve certain rooms in your house, such as putting in a new kitchen or bathrooms. This can be quite expensive and you will need to share the costs with your spouse.
If you do decide to improve your home, be sure to discuss it with your Orange County divorce lawyer so that you can come to an agreement about costs. Now, some brokers may want you to spend significant amounts to improve your home. Try to decide on some realistic amount you can afford before you agree to pay for anything.