Real Estate Divisions in Divorce

Dividing property can be a major issue in a divorce, especially real estate. Real estate may include land, houses, rental properties, business locations, and other structures. When a divorce involves the family home, there is likely a sentimental attachment to the marital home. There is no monetary valuation for sentimental attachment.

Like child support, child custody, spousal support, or alimony, deciding on the division of real estate is one of the most important issues in a divorce. An experienced divorce lawyer in your area can help with the marital asset division, including real estate.

Understanding Real Estate Division in Divorce

Personal property may be simple to distribute during the divorce process. Regarding marital debt, credit card debt, car loans, and some medical bills may be relatively easy to divide. However, real estate can come with its own set of complicated legal issues. Selling the home quickly may not be possible, delaying the availability of settlement proceeds.

You and your spouse can agree on a divorce settlement in divorce proceedings. The court could approve the couple’s distribution plan for property division in an uncontested divorce. If you cannot agree, the court considers your divorce case “contested.” In such cases, the family law judge will decide the property division under the state’s divorce laws. Different states follow different property distribution laws.

Community Property States

Marital property is acquired during the marriage in a community property state. Upon divorce, the property is equally divided, no matter which divorcing spouse earned the assets or debts. However, property acquired before the marriage in the spouse’s name may still be considered the spouse’s separate property. This is also the case for gifts or inheritances.

Equitable Distribution States

In equitable distribution states, property acquired during the marriage is generally considered marital property and is subject to fair division by the court, regardless of which spouse earned the income or holds the title. Commingling assets during marriage can complicate the determination of separate property in equitable division states. In a divorce, the court makes an equitable division of the marital estate based on several factors.

Whether in a community property or equitable distribution state, if you have a prenuptial agreement, the agreement may control what happens to the property.

Valuing and Dividing Real Estate Assets

A residential home is the largest asset for many people. The value of your real property may amount to hundreds of thousands of dollars, if not more. Courts generally prefer to sell the property or award one spouse 100% of the residence.

Valuing your real estate is a critical first step in asset division. It’s not as easy to divide up a house as bank accounts or retirement plans. Determining the house’s value usually requires the help of an appraiser or other real estate professional. They use several methods to determine the property’s fair market value. Your divorce attorney can help you connect with a professional to assist with the valuation.

Options for Dividing Real Estate

A family law attorney can help you decide the best option for dividing real estate. Sometimes, the property has minimal equity. Or, the liabilities associated with the home, such as the mortgage payments, are more than a spouse can handle alone. In these cases, selling the house and dividing any remaining proceeds may be the best option.

Depending on the circumstances, a judge may require a home sale if the parties cannot agree on the division of property. It’s almost always better to reach a settlement agreement through negotiation. Otherwise, the divorce decree may not represent the wishes of either party.

Even if neither you nor your ex wants to sell the home and you both want to keep the house, the court can require the sale to change the property into financial assets that can be easily divided. If you want to remain in your home, this is an issue that you should discuss with your divorce attorney. They can explain all your options.

Dividing Up Investment Property

Many couples, like those with retirement accounts, have rental properties or other real estate holdings as long-term investments. Like other real estate, investment property can be marital or separate property.

During a divorce, rental property does not get the same treatment as a family home. For example, understanding capital gains taxation rules for both the family home and investment property is critical. This may impact the timing of the transfer and sale of any real estate.

Also, a court is more likely to treat rental properties like other property in a divorce. Generally, the options for dividing up investment property include the following:

• Selling the property and dividing the profits
• Buying out the other spouse’s interest
• Continuing to rent out any property with a business agreement with the divorcing spouse

Most couples want to sever financial connections with former spouses and will opt for one of the first two options. Talk to an experienced divorce attorney if you have questions about dividing investment property in a divorce.

State Laws Affecting Real Estate Division

In a community property state like California, if the couple buys the house out of marital funds, the house belongs equally to both spouses. If the spouses cannot agree on who gets to live in the house, a court could require one spouse to buy out the other’s interest in the property or force a sale and divide the proceeds. If one spouse is buying out the other, the property’s current fair market value will likely determine the price of the buy-out.

In an equitable distribution state like New York, the court may look at several factors in deciding who gets the family home. Factors to consider in the equitable distribution of the home may include:

• Whether minor children live in the home
• Which parent will the children primarily live with
• The children’s best interests
• The ages of the spouses
• The economic circumstances and earning potential of each spouse

Getting legal advice about your home’s distribution and how to divide other property under the applicable state law is critical.

Getting Professional Guidance for Real Estate Divisions During Divorce

Professional guidance from an experienced divorce lawyer in your area is essential. Concerning a real estate division, they can help you with the valuation and understanding the tax implications of the real estate property distribution. Get help today.