Dividing real estate at divorce can be quite simple or incredibly complex. The properties will individually need to be characterized as separate or community property. From there, any possible reimbursement claims must be addressed. Although one spouse may have brought a separate property residence into the marriage, if the community made payments toward the mortgage or used community funds for improvements to the property, the community may be entitled to a reimbursement for its contributions. In some instances, the community may acquire an ownership interest in the property and will be entitled to equity. In the case of the party who brought in a separate property residence to the marriage, he or she will be awarded that property at divorce, but will be required to reimburse the community with cash or other property. If the separate property owner does not have cash to pay the community with, he or she may need to sell the property and use the proceeds to satisfy the debt to the community.
If a property was acquired during marriage and both parties are on title, that property is presumptively community property. Nevertheless, if one spouse paid separate property toward the down payment, that spouse would be entitled to a dollar-for-dollar reimbursement. At divorce, parties often decide to sell the property, pay off any reimbursement claims, then split the remaining proceeds. Parties often reach deferred sale agreements if they wish to maintain a given property until an upcoming event, such as their youngest child’s high school graduation. Alternatively, one party will purchase the other party’s ownership interest and refinance the property on their own.
Property cases become more complex when properties are refinanced during the marriage or used as income properties. Parties and counsel often have to rely upon real estate appraisers and forensic accountants to untangle their realty assets, even if only one or two properties involved. For families with a large real estate portfolio it may take several experts, appraisers, and real estate attorneys to straighten out the case and help parties settle.
Ultimately, parties can divide their properties by agreement in whichever manner they see fit. Nevertheless, if the parties are unable to agree, division of their real estate holdings will be litigated and the outcome will come down to the court. In that case, once the community property interest is determined, it must be divided equally between the parties.