Who Gets the House in a California Divorce?
One of the most stressful decisions in a divorce is deciding who will get the family home or if it will need to be sold to a third party. The home is often the most valuable family possession, and people feel emotionally attached to their homes. And when children are involved, there are more practical and emotional issues to consider.
Several factors should be considered when deciding who gets to keep the family home or if it will need to be sold. Some examples are where the children will reside, whether the other spouse will be able to afford to maintain the family home once the divorce is over, tax consequences, and reimbursements. These factors will be discussed generally in this article.
Because the problems that can emerge when splitting a house during a California divorce are complex, it is always important to get legal advice on the best course of action for your case. It is essential to have knowledgeable asset division attorneys on your side during a divorce. A skilled San Luis Obispo, CA, family law attorney can help you negotiate a fair divorce settlement. Call 805 Law Group now for a consultation on the division of marital property.
Who Owns the House?
Finding out the legal owner is the initial step in deciding who gets to keep the house or if it will be sold instead. Although this sounds like a simple issue, it’s not always that clear.
Presumption of Community Property
Property bought during a marriage is presumed to be “community property” in California. This means it is owned equally by both parties unless one of the spouses gained the house from inheritance or as a gift.
In the simplest scenario, the married couple jointly purchased the house while they were still married (solely using community property money), and they are both listed as owners in the title. In this situation, the house is community property, and each spouse has an equal stake.
However, the realities of homeownership are not always that easy. On certain occasions, the title of a house bought during the marriage is under the name of just one spouse. In this case, the title implies that this house is separate property, and owned by the spouse whose name appears on the title.
The other spouse may rebut this assumption by proving that both spouses agreed or understood that the marital home belongs to them despite both not being on the title. However, contesting the presumption caused by the title could be very complicated and needs compelling proof that the intention was for both parties to own the house.
Ownership of Separate Property Before Marriage
When one spouse acquires a house before marriage, the house becomes separate property of that spouse. The issue becomes more problematic when the non-title spouse contributes financially to the house loan or for house upgrades throughout the marriage. In this situation, the non-title spouse will have a financial stake in the marital residence, which might be considerable, particularly if there was a long marital period.
So, Who Gets the House in Divorce?
The owner-spouse gets the marital home if it is deemed separate property. If the marital home is considered community property, it may be split in several ways in the divorce ruling, either by a divorce settlement agreement or court order.
Put Up for Sale and Divide the Profits
Couples may agree to put their house for sale and share the profits. If neither spouse can afford to buy the house alone, this is almost always the only viable alternative.
A second alternative would be for one of the spouses to buy the house outright to pay the other partner their share. The buying spouse would need the house refinanced to remove the selling spouse from their mortgage.
The spouse’s ability to buy the home to afford the associated costs of full ownership of the house must be considered, such as:
- Monthly amortization of the mortgage
- Real estate taxes
- Utilities, repairs, and maintenance
The financial computation must also consider tax consequences. You must assess if the spouse buying is eligible for a mortgage interest tax deduction.
In addition, spousal support in the form of mortgage payments by the selling spouse may be ordered by the family court or agreed upon by both parties. If this is the case, the spouse making the mortgage payment may be able to claim a tax deduction for spousal support payments. The spouse who keeps the house must claim the payments under spousal support income, yet could still be eligible for a mortgage interest tax deduction.
Spouses Remain on Title or Deferred Sale
If the spouses share small children, the divorce court may issue a court order temporarily delaying the sale of the family home. This court order is referred to as a “deferred sale of home”. In this case, both spouses will continue to jointly own the family home for a specific time. This provides the custodial parent the exclusive use and occupancy of the family home during that time. A deferred sale order intends to lessen the divorce’s impact on their children.
When contemplating a deferred sale order, the family court must examine first if the spouses can afford the home payments after the finalization of the divorce. The incomes of the spouses, the availability of financial support, as well as other resources available that can be used for payments, will be considered by the court.
If the divorce court determines that a deferred sale is economically possible, it must determine next if a deferred sale is needed to reduce the divorce’s impact on their children. The following factors will be considered by the court:
- The number of years their children have lived in their house
- The ages and grade level of the children in school
- The distance of the house to the children’s school and daycare, as well as other services they need
- If the house has been renovated to manage a physical impairment of a child or its custodial parent, wherein moving to a different home would make meeting the children’s needs more problematic for the custodial parent
- The emotional effect on the children of relocating houses
- The degree to which the home’s location permits the parent who lives there to keep their job
- Each spouse’s financial capacity to afford a suitable housing
- Tax consequences of a delayed sale for both parties
- The financial effect of a delayed sale to the parent who does not live in the family home, and
- Other considerations that the family court deems relevant and reasonable to take into account
A deferred sale ordered by the court will indicate the duration of time that the order will be in effect until the spouses sell the family home.
No matter what happens to the house, the court will evaluate each spouse’s share by looking at whether or not one is entitled to be paid reimbursement by the other. In the following cases, a spouse may be eligible to receive reimbursement:
Separate Property Paid for using Community Funds
It is considered separate property if a spouse owns a house before marriage. However, if common money is utilized throughout the marriage to pay the mortgage or to repair the separate property house, the other spouse obtains an interest in the home. The divorce court will apply a formula to assess the partner’s stake in the marital home during the divorce proceeding, and they will receive reimbursement for the contributions made.
Mortgage Payments Following Separation (“Epstein Credits”)
In California law, a court may issue an order for the compensation of a spouse if they use separate property money to make mortgage payments on a communal property after their separation date. The court can also issue this order before their divorce unless this would be deemed unfair and unreasonable for that particular spouse to seek compensation.
For example, the court will not order reimbursement for the following scenarios:
- If both spouses agree that no reimbursement will be required
- The payments were a gift
- The spouse making the payments continued living in the home
- The payments made were not significantly more than the value of the rental of the home
- The payments were in exchange for or as another form of spousal support
Charges for the Exclusive Use or Occupation of Family-Home Following Separation (“Watts Charges”)
When the property is split, the spouse who has the exclusive use and occupancy of the family home between the separation and the divorce can be charged with the house’s fair rental value for that particular period, attributing half of that value to the other spouse.
Try to Reach an Agreement with your Spouse
Married couples should agree on how to split assets and property. Working things out directly with your spouse is typically in your best interest since it gives both parties at least some influence over your fate while also avoiding the financial burden of going to family court. Moreover, you are unlikely to want the judge to make these challenging choices for you. The decision about the family home should ideally be made by mutual agreement with no judicial intervention.
Make Sure to Be Informed if You End Up in Court
If husband-and-wife are unable to reach an agreement, a court will have to make the decision. California law will govern how a divorce court decides who gets the marital home following a divorce. In a community property state like California, courts are mandated to distribute all community or marital property as fairly as possible. If the family home was purchased during the marriage and has $100,000 in equity, a divorce court may award it to one spouse (Spouse A), as long as Spouse A pays Spouse B their $50,000 share. That is referred to as a buy-out.
Alternatively, in some instances, the divorce court may order that both parties sell the family home (e.g., where the family home presents a heavy financial burden). A court might determine “who gets the house” in several ways. You should speak with an experienced family law attorney from the 805 Law Group to learn more about your case.
Several states have automatic restraining orders that are divorce-related on either spouse who is selling or mortgaging the marital residence during the divorce. Even when the marital property is solely under your name, you will not be able to sell or encumber it without your spouse’s permission or court approval.
Experienced San Luis Obispo and Atascadero Attorneys You Can Trust
It is best to consult an experienced divorce attorney from the 805 Law Group to ensure you are protecting your legal rights while respecting those of your spouse. A judge may impose fines or several penalties on you if you violate your spouse’s rights during the divorce (e.g., selling the family home without permission).
If you need legal representation to get divorced in California, you can trust that the lawyers at 805 Law Group will look out for your best interests always. Make an appointment to meet with one of our divorce lawyers serving San Luis Obispo and Atascadero counties.