Divorce & Real Estate
This article tells you about getting divorced when you and your spouse own (or are purchasing) a house or land.
Before you divide real property in your divorce, you need to determine if the real property is separate or community property.
Separate property is any property that you or your spouse owned before the marriage or that you received during the marriage as a gift or inheritance. Separate property can also include property purchased using funds that meet the definition for separate property. For instance, if you received funds as a gift and used those funds to purchase a house, that house would still be separate property.
Community property is all property bought during the marriage with income received during the marriage.
Any real property that was purchased during the marriage is considered community property even if only one of the spouse’s names is on the deed. What matters is that the title to the property was acquired during the marriage.
There are some exceptions to this rule, such as, if the real property was bought with one spouse’s separate property, the real property will be that paying spouse’s separate property. During the divorce, it will be that spouse’s responsibility to prove that they used separate property to buy the real property.
If the real property was refinanced during the marriage, the real property will remain separate property. However, if both spouses’ names are on the refinance documents, it can be argued that the spouse who owns the real property has gifted 50 percent of the real property to the other spouse as their separate property.
If the real property is separate property, the court cannot award it to other spouse. However, the spouse claiming it to be separate property must provide the court with clear and convincing evidence of how it is separate property.
Real property that is community property will need to be divided during the divorce. Since real property cannot be split in half, the parties will need to determine the value of the real property and decide how to divide any equity or debt. The real property may be sold or one of the parties may keep it.
The most common type of real estate divided during a divorce is the marital house.
- If one spouse wants to stay in the home, they can agree to keep the house and the debt associated with the house.
- The parties may also agree that one spouse will keep the house and give the other spouse half of the equity.
- Divorcing parties may also agree that the spouse not keeping the house will keep other assets to offset the value of the house they were supposed to receive.
If the parties cannot agree on how to divide the house, the judge may order the parties to sell the house or the judge may award the house to one party.
Your divorce decree should include a detailed legal description of the house and who is to receive it. The final decree should also state who will be responsible for all the expenses associated with the house.
Once the judge signs the decree awarding the house to one spouse, the other spouse will need to sign a Special Warranty Deed transferring all your interest in the house to the other spouse. The Special Warranty Deed must be filed in the County Clerk’s Office property records.
The only way to remove your name from the mortgage after the divorce is for the spouse keeping the house to refinance the mortgage in their name. This process may take time because the bank will look at that spouse’s income and assets to determine if they can refinance the mortgage.
Your final decree should state whether the spouse keeping the house has to refinance the loan and how long the spouse has to refinance. The court cannot order a bank to give a loan, but having it in writing allows you to file a motion to enforce the decree if your ex-spouse does not refinance in time.
It is best for the parties to sign a Deed of Trust to Secure Assumption promising to pay the mortgage until the spouse ordered to be responsible for the debt can refinance. This should detail what rights the other spouse may have if the spouse responsible for the debt defaults on the mortgage.