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Divorce Lawyer Answers Important Housing Question

I’m Getting Divorced. What Happens to My House?

A family’s home can be the most valuable asset in a divorce. It also can have lots of emotions and memories tied to it. For those reasons, what happens to it in a divorce is a question we often are asked by clients.

We often counsel our clients on the pros and cons of keeping the family home after a divorce. It’s no secret that determining what happens to the family home has the potential to become contentious.

If you’re in this situation right now, read on to learn about some things you’ll want to consider as you determine what’s best for you and your family.

California is a community property state, which means your spouse is entitled to half the proceeds of the house in a divorce if the home was purchased during your marriage.

Let’s say you can afford the mortgage payments and other associated expenses on your own, and you’ve determined you want to keep the home. If your spouse doesn’t want the home, you could offer a buy-out and refinance the home to get the mortgage in your name only.

If you cannot reach an agreement about what happens to the family home now that you’re divorcing, a judge could order that the home be sold and the proceeds divided evenly. Those proceeds would be the money left after the mortgage is paid off, as well as any home equity lines of credit and second mortgages. Both of you will owe capital gains taxes on the proceeds.

“In some cases where other liabilities are involved, proceeds from the sale of a home may be applied toward credit card or student loan debt,” says John Griffith, an Encinitas divorce lawyer. “Then the couple would split any remaining proceeds.”

An unfortunate fact is that sometimes (especially since the housing bubble burst in 2008) a divorcing couple isn’t dividing assets in a divorce- they’re dividing liabilities. The home could be the biggest liability if the market hasn’t rebounded in your area and there’s no hope of making enough profit to cover the liabilities.

If the mortgage is in both names, you both remain liable for it until the family home is sold, or one spouse refinances the mortgage to get it in his/her name only.

Griffith often recommends mediation if a couple can’t reach an agreement regarding the fate of the family home.

“It behooves both of you to set aside any anger and animosity and work to reach agreement on as much as possible outside of court,” Griffith says. “If you don’t, you leave important decisions in the hands of a judge, and what the judge rules may or may not benefit you as you had hoped.”

If you’re going through a divorce and anticipate having questions about what will happen to your home, please contact our office for a consultation. We are happy to help you explore your options.