Divorce can be emotionally draining and disruptive. And nothing would be more disruptive than having to sell your home and move. Many people do not want to move, especially if they have young children who are in school.
Dividing marital property is frequently on of the most difficult subjects of the California divorce process. Negotiating with your spouse on what to do with the family home is often a major challenge. One spouse wants to keep the home, while the other decides to sell it.
So, the big question is are you required to sell the family home if you are getting a divorce in California? The short answer is it's not necessary, but is a convenient easy way to divide assets. In other words, you do some options to consider when making this critical decision.
There is no legal requirement that you sell your home in a California divorce. However, circumstances might arise where selling the house is your only option for complying with the court order to divide your community property.
Below, we go through different scenarios about selling the family home and situation where you might need to sell. Reach out to a California divorce attorney at our law firm as soon as possible to analyze your unique situation.
Selling The Family Home
In California, couples who are divorcing are typically entitled an equal share of all their community property. Frequently, asset division is hotly debated especially when it involves a family home.
Many couples will decide to sell and equally divide the proceeds, but it's not always that easy as there are limitations that might make this process a big challenge. You should consult with our lawyers to review this process and to ensure the family home if properly sold.
Making an Agreement to Sell Home
You can certainly make an agreement with your spouse to sell the home. Once you file the divorce petition and papers are served, there are some standard family law restraining orders that are ordered by the court. It will include an order prohibiting either spouse from selling the family home unless there is a written agreement.
If you come to an agreement with your spouse to sell the home, you can agree to terms and have the court approve it, but you will have to cover the different issue that will come up once you put the home up for sale.
The judge will review the terms which will normally include the price, real estate agent, reviewing offers, who communicates with agent and maintain the home, how the proceeds will be divided, among others.
If you decide to sell your family home before the divorce is finalized, you will need to get a written agreement from your spouse. If you unable to secure an agreement, it may be possible to get a court order to sell without their consent if you can show it's necessary with substantial evidence. For example, a situation where the home could be facing foreclosure or you need the sale proceeds for legal fees and cost of the divorce.
Court Order to Sell Family Home After Trial
If an agreement between spouses can't be reached on what to do with the home, the court may issue an order to sell it. In this situation, the court will typically wait until the divorce case is over. If this happens, both spouses are legally required to follow the terms of the court order.
This is just one example of why you should find a way to work out a solution with your spouse on what to do with the family home. You do have options for working out a solution, such as mediation and collaborative divorce. Don't make the court get involved.
The buyout process in California essentially allows you to buy out your spouse's potion of the family home. Again, you will need to make an agreement with your spouse on the specific terms. It's similar to just selling the home, but it will allow you quickly get past the time consuming and expensive process of a normal home sale.
In these buy out agreements, a neutral appraiser will determine the value of the home, equity, and liabilities. Next, the spouses will come to an agreement on the total value of the buyout and compensation can be made with cash, assets, or both.
If divorcing spouses are able to make a verbal agreement buyout, they will then place the terms in writing, sign the agreement, and submit to the court for approval.
However, there are situations where you might need to sell your home. Let's review below
You Have Few Community Assets Apart from Your Home
For many couples, their home is their largest asset. In fact, many couples may not have significant assets otherwise, especially if they are relatively young and have not been able to save for retirement.
In a community property state like California, you need to divide any assets you obtained while married. If you bought your home while married, it's community property—regardless of whose name is on the deed. Community property is divided equally, 50/50, in most cases.
Even if you bought your home while single, your spouse might have an interest in the home if you used income earned while married to either make improvements or pay down the mortgage. That income is community property, and the increased value in the home is attributable to those community assets.
Let's say you have a home, a car, and one retirement account. Below are the values:
- Home: $200,000
- Car: $25,000
- Retirement account: $75,000
In this example, a couple has $300,000 in community property. If a judge divides it 50/50, each spouse gets $150,000. Unfortunately, the car and retirement account only equal $100,000. This means that one spouse is entitled to $50,000 of the value of the home. Here, you probably must sell the house because there is no way to divide the community property 50/50 otherwise.
You Have Debts You Can Use to Offset
A divorce divides community assets along with community debts. In some situations, you might be able to keep the home by accepting more of the community debt.
In the above example, we assumed that you had no debts. But you might have a $100,000 mortgage still on the home. This means you have the following assets and debts:
- Home: $200,000 but subject to a $100,000 mortgage
- Car: $25,000
- Retirement account: $75,000
Here, the community estate is worth $300,000, but you also have $100,000 in community debt. In sum, the community estate is worth $200,000. You could divide it 50/50 by accepting the home and taking over the entire mortgage. Your spouse can then take the car and retirement account without any debt.
You Have Young Children
If your children are in school, you probably don't want to move. You could ask the court to let you stay in the home until they graduate high school, at which point you will sell the house and split the equity after paying off what remains of the mortgage.
This is a complicated arrangement because someone has to pay the mortgage, property taxes, utilities, etc., while someone is living in the house. It's usually easier for divorcing couples to make a clean break of each other financially after the judge signs a divorce decree. Work closely with Los Angeles divorce lawyer if you want to ask a judge to sign off on this arrangement.
You Can Rent the Home
If you don't want to sell, you could rent the home and divide the rent as well as the expenses of keeping up the property. This is rarely a good option for a couple unless the housing market is very weak and you expect it to rebound in the near future.
At that point, you could get much more value for the house if you delay selling it. Your proceeds from the sale will depend on what share of the home the judge awarded you.
Contact Our Los Angeles Divorce Attorneys
if you are getting a divorce, you will have to make some important decision. Property division is rife with complications, and few people are happy to lose the family home. To protect your rights, you should work closely with an attorney who can identify your options.
Contact our law firm for help. We are established Los Angeles divorce attorneys who can assist in the division of marital property. Call 818-528-3471 or complete this online contact form.
Furman & Zavatsky LLP
15821 Ventura Blvd #690
Encino, CA 91436