How Is the Family Home Divided in a California Divorce?

In California, a community property state, a divorce generally requires division of the couple’s marital property, which is comprised of assets acquired during the marriage. This includes the marital home: often the couple’s largest single asset. However, dividing the home’s ownership can be complicated, since there are frequently family and emotional considerations along with economic ones.

If you are a California resident getting divorced, there are three basic options available for dealing with a home presumed to be community property. Each of the following paths has its own set of advantages and disincentives:

1. Sale and division of proceeds — One common approach is an immediate sale of the home, with the net profits being split between the spouses. This option is usually straightforward and helps both parties obtain liquidity. A sale can be advantageous if neither you nor your spouse can afford to maintain the home on your own, if you cannot agree on who should be allowed to keep the house or if either of you has an immediate need for cash. However, selling the home may be ill-advised depending on the state of the housing market. Also, there may be a capital gains tax if your profits from the sale exceed a certain threshold. 
2. Spousal buyout — If an agreement can be reached, it may be financially prudent for one spouse to buy out the other’s interest in the home. This can be suitable if you or your spouse have a strong emotional attachment to the home or if your children would benefit from continuing to be raised there. The buying spouse typically refinances any existing mortgage solely in their name and assumes ongoing property tax and community fee payments. An accurate and reliable valuation of the property is essential. A buyout can be paid for by cash and/or by giving the selling spouse a greater share of other marital property.
3. Deferred sale — This option is often used when an immediate sale is unfeasible for economic or family reasons. It allows one spouse, usually the one with primary custody of the couple’s children, to remain in the home for a specified period of time. That period can be pegged to a future event, such as the youngest child reaching majority ages or graduating from high school. During the deferral period, both spouses share ongoing financial obligations, such as mortgage payments, real estate taxes, utilities and maintenance. However, the spouse not in possession is entitled to a credit, since he or she is also paying the costs of a separate residence. A deferred sale arrangement can also include provisions for a sale if optimal market conditions should arise.

In deciding on the best course of action, professional guidance can be invaluable. A California divorce attorney skilled in asset division can help you evaluate the financial and practical implications of each option and work towards an arrangement that best suits the needs of you and your family. They can also assist in negotiating terms that protect your interests, whether it involves financial analysis for a buyout agreement or drafting detailed provisions for a deferred sale.

The Gates Law Group, A Professional Corporation in Fresno offers legal representation in divorce matters to people throughout California’s Central Valley. We also have locations in Paso Robles and Visalia. Please call 559-432-9944 or contact us online to schedule a free initial consultation.