What happens to the family home during divorce in California?

Divorce involves not only the separation of lives but also of assets. This process is guided by state law and California uses a community property system which essentially means that the court will consider any assets acquired during the marriage as owned equally by both spouses. This includes real estate.

The family home often represents not only a significant financial asset but also a place of emotional attachment. Deciding what happens to the home can be one of the most challenging aspects of a divorce. An important case, In re Marriage of Horowitz, highlights the following complications that can arise during these negotiations.

1. Community property and separate contributions: Community property is subject to division during divorce while separate is not. In some cases, both can come into play. This was true in the Horowitz case as Sarah had used separate property to make contributions towards the family home. The court took this into account in its calculation of ownership percentages and the division of the home’s value.
2. Options for property division: The appellate court highlighted several potential dispositions for the family home, including selling the home and dividing the proceeds according to established ownership percentages, Sarah purchasing Seymour’s interest outright, or placing the home in both names as tenants in common with stipulations for future sale or buyout.
3. Ownership for child’s sake: The court also addresses ownership remaining with one parent for the benefit of raising children after the divorce. The original arrangement in this case allowed for ownership until the youngest child reached age 21. Seymour contested this arrangement, and the court agreed, changing the age used in the agreement to 18. At the end of the arrangement, the other party is generally given the option to buy out the interest in the home or sell.

This case highlights the need for careful consideration of all factors when determining how to best move forward with a family home after divorce, including the welfare of children, financial fairness, and the practicality of each option given the family’s circumstances. In re Marriage of Horowitz, 159 Cal. App. 3d 368 (Ct. App. 1984).

Handling vacation and rental properties

It is also important to address vacation and rental properties. The division of these properties can have significant financial implications, especially if they generate income. Those going through a divorce can use similar strategies as outlined above, such as selling the properties and dividing the proceeds. The parties may also choose to have both retain joint ownership and continue to share income and expenses. It is helpful to have a contract that will clearly outline the expectations of each party in such an arrangement.

It is important to consider the benefits and risks of each option carefully. Each has different implications for future income, tax obligations, and personal use of the properties.

Legal and financial considerations

When dividing real estate, it is important to consider the current market value of the properties, any mortgages or loans secured by the properties, and any tax implications of selling or transferring property ownership.

Dividing real estate during a divorce in California requires careful consideration of community property laws and the specifics of each property. Whether it is the family home or vacation and rental properties, the parties must evaluate each asset and move forward in a manner that helps to better ensure an equitable division. Ultimately, the goal in dividing real estate during a divorce is to ensure that both parties can move forward with their lives on a stable financial foundation. By carefully considering each aspect of the property division process and seeking appropriate professional advice, divorcing couples can achieve a resolution that honors their past contributions and supports their individual futures.