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What do community property rules mean for a house during divorce?
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What do community property rules mean for a house during divorce?

On Behalf of | Sep 20, 2023 | Property Division

Marital property is divided either by divorcing spouses or the courts when a marriage ends. California generally treats whatever people obtain and earn during a marriage as community property. Regardless of who earned or acquired those resources, both spouses usually have a legally-enforceable interest in them.

If there is one asset that usually becomes the focal point of property division negotiations or litigation, it is the marital home. Couples often commit a third of their monthly income toward mortgage payments and more than that to upgrade and maintain their home. Obviously, it isn’t possible to physically divide a home in half during a divorce. As a result, it’s understandable that many divorcing couples wonder what community property rules mean for large, expensive assets like real estate.

Home equity is subject to division

Although there are rare situations in which people retain joint ownership of a home after divorce, most couples will have one spouse retain the home while the other receives a fair share of its equity. Other times, divorcing couples can sell the home where they live together and share the proceeds from the transaction.

Either approach requires establishing the current fair market value of the home and how much of its equity is part of the marital estate. Couples can either negotiate an arrangement that they agree is appropriate, or they can ask a judge to divide their property. A judge will consider the marital home as part of the broader marital estate and will use its value when making determinations about how to split assets and debts.

Keeping the home isn’t always the best choice

People often view retention of the marital home as a sign that they have won their divorces. However, retaining the home might mean taking on more financial and practical responsibilities than one person can manage on their own. It is there for crucial for divorcing individuals to recognize that there is more than one way to address the home in the divorce so that they can set realistic goals that will lead to the best possible outcome for them in the future.

Understanding that a spouse generally has a right to a fair share of a home’s value even if they do not choose to continue living there might help people better manage their upcoming California divorce proceedings. Seeking legal guidance can help to ensure that this issue is handled fairly and in ways that respect the rights of everyone involved.