Dealing with the family home during a divorce

Deciding what should be done with the family residence is often a thorny issue when couples divorce, and this could be especially true in community property states like California. Spouses often have a great emotional attachment to homes where they have watched their children grow, and they often wish to remain in them even when doing so could cause them great financial hardship. The family residence is also usually the most valuable asset the couple owns.

Under California law, marital estates must be divided equally rather than equitably in a divorce, which often leads to contentious debates over what is and what is not a marital asset. Any asset that is purchased after a couple marries is generally considered part of the marital estate, but matters become more complex when dealing with family residences when money that was not part of the marital estate provided part of the down payment or was used to make repairs or improvements. Money spouses had before they married or inherited while they were married would generally not be considered part of the marital estate.

Reaching an agreement over what a home is worth can also be challenging. Lenders generally demand thorough appraisals performed by qualified professionals before they will consider a mortgage application, but such appraisals take time and are expensive. Alternatives include broker price opinion and competitive market analysis appraisals from real estate professionals based on current market data, but they are not as accurate and may be questioned if discussions over the family residence become heated during property division talks.

Mortgages are another potentially sensitive topic for divorcing spouses. While it may be easier and simpler to leave the mortgage in place and put a provision in the divorce settlement that stipulates who is responsible for paying it, experienced family law attorneys may recommend that it be paid off. This is because banks do not pay attention to divorce settlements when mortgages fall into arrears and will go after both parties for payment.