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How Can You Negotiate a House Buyout During a Divorce?

Posted by Lee Zavatsky | Sep 14, 2022

Once you have decided to get a divorce in California, you will eventually have to discuss the crucial issue of dividing assets, including the marital home, which often quickly becomes a hotly debated topic.

Most spouses will have a solid emotional attachment to their home because of the life-long memories with their kids. It's frequently a challenging subject for many divorcing couples even to discuss. Usually, you will need to be the custodial parent to buy out the noncustodial parent for the kids to grow up in the family home.

Negotiate a House Buyout During a Divorce
Negotiating a buyout with your spouse is a common way to keep the family home in a divorce.

Anyone getting a divorce needs to understand that it is a series of negotiations and compromises by its very nature. California is a community property state, meaning all “marital” assets will be divided equally unless a contract states otherwise, such as a prenuptial or postnuptial agreement. Another way is to reach a mutual marital settlement agreement with your spouse.

Thus, one of the most common ways for a spouse to keep their home is to negotiate a house buyout. Some spouses are committed to providing stability for their kids by keeping the family home where they have always lived. They want to maintain the same standard of living for the best interest of their children.

The first and most essential step you must consider before negotiations with your spouse is determining whether you can afford the home. The next issue is whether the noncustodial parent will even allow you to keep it.

Many divorces get ugly, and some spouses are so angry over the situation that civil negotiations are not an option. Our California divorce and family law lawyers will discuss this topic in more detail below.

The Basics of a Home Buyout

A home buyout occurs during divorce proceedings when one spouse buys the other's financial interest in the marital home. As mentioned above, this is usually one of the emotional subjects when splitting assets in a divorce.

Home Buyout in a California Divorce
A home buyout in a California divorce often involves giving up other assets to your spouse.

Selling the home and equally dividing the assets is not always viable. One of the reasons is that you might not be able to get the best market value at the time of the divorce. Further, keeping the house under the names of both spouses will continue to cause tension and conflict when attempting to start a new life.

This means the best way to resolve the family home issue is to buy the other spouse's financial interest in the property. When children are involved, they are usually the main reason a spouse will attempt a home buyout, which means they won't have to move to a different neighborhood.

In most cases, one spouse will not have enough cash to buy out the other. This means they will have to use different methods, such as:

  • You agree to give up other assets, such as cars, boat, etc. and
  • The assets you give up are close in value to the home,
  • Refinance the existing mortgage loan to buy out the other spouse,
  • Exchange alimony, pension, retirement, or investment accounts.

Another essential item that falls under the category of “basic” information is that you must be able to financially pay the mortgage, maintenance, and property taxes after the home buyout in a divorce. You don't want to place yourself in a difficult financial situation where you are forced to file for bankruptcy.

In other words, you can't make long-term financial decisions based on personal emotions and attachments. Letting go of the marital home is indeed tricky, but you must consider your current and future finances for a home buyout to work. Do you want to have the home repossessed later because you couldn't afford the payments?

A house buyout in a California divorce has risks for both spouses. If your spouse is buying you out of the home, you need to ensure you will no longer be liable if they stop making mortgage payments or property taxes.

How Can You Determine the Value of Your Family Home?

One of the first steps in a home buyout in divorce is determining the property's value. As mentioned above, California is a community property state, which is also referred to as “marital property.” Simply put, all property obtained or purchased during your marriage must be divided equally between the spouses during the divorce.

Determine the Value of Your Family Home in a Divorce
A crucial step in a home buyout in divorce is to determine the value of the family home.

To keep the home, you must buy your spouse's share of the marital home. Thus, to accomplish this, you must know the house's fair market value. This applies whether you are the spouse buying out the other or the one selling your share.

This means you must determine the acceptable worth of the home that both spouses can agree upon.  If you have a different opinion on the home's value, then you must retain a neutral real estate appraiser to determine the home's current market worth. It would help if you split the appraiser's cost with your spouse.

Once they complete their evaluation, they will provide both spouses with a detailed report. Another option is to ask a local realtor to inspect the home and tell you the sales price of similar houses in the neighborhood.

After you have agreed on the home's value, you will need to raise the equity to buy out the other spouse to deal with the issue of debts and separate contributions into the house.

Even after you have agreed with your spouse on the home's value, you can still make adjustments so your spouse can conduct a buyout. Some of the issues with adjusting the market value include:

  • Spousal support,
  • House maintenance,
  • Mortgage broker fees and Refinancing issues.

Perhaps you can persuade your spouse to lower the buyout price to avoid making spousal support payments. If you are the receiving spouse, you could negotiate giving up support in exchange for your spouse's financial share in the home.

Can One Spouse Be Awarded the Family Home?

Possibly. On the crucial issue of a California family law court awarding the family home to one spouse, several factors are considered before making a decision.

Recall from above that any property acquired during the marriage will be split equally, 50/50. If you cannot reach a mutual agreement with your spouse on dividing assets, you are forcing the court to do it for you.

Can One Spouse Be Awarded the Family Home?
It might be possible to negotiate for one spouse being awarded the family home in a divorce.

However, certain financial circumstances could force a family court judge to award one spouse the family home if they believe it's necessary to ensure equitable property division of the marital estate.

If the judge favors one spouse in retaining the family home, there is typically an exchange of cash or other marital property of similar value. When a judge is attempting to determine whether they will award one spouse the family home, they will consider:

If the court decides to award one spouse the family home and that spouse experiences routine financial issues preventing them from affording the house, then the court could order them to sell it. If you are planning a divorce and need to negotiate issues regarding the marital home, you have the standard option of a home buyout.

In many cases, a buyout is in the best interest of your kids, but there are some risks involved. You need to ensure that you understand all the legal options and possible consequences. We can help you negotiate a home buyout.

Furman & Zavatsky and California divorce and family law attorneys in Los Angeles County. We provide legal representation across the state. Our law firm offers a free case evaluation via phone or use the contact form.

About the Author

Lee Zavatsky

Lee Zavatsky is a partner at Furman & Zavatsky, a law firm dedicated to the practice of Family Law. Mr. Zavatsky has been selected as one of the Top 40 Under 40 by The National Trial Lawyers, a professional organization composed of the top trial lawyers from each state or region who are under the...

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