In California, assets are divided pursuant to the principles of “community property” law. Generally, this means that assets that are acquired during marriage are divided equally between the spouses upon dissolution of the marriage. “Separate property” means property acquired prior to marriage (and therefore brought into the marriage) and after separation, and property acquired through gift, bequest devise or inheritance (regardless of when received). Property can also be a mix of community and separate property. These concepts are important for the issue of dividing a marital home upon dissolution of marriage in L.A.
Los Angeles divorce cases are no different than other divorce cases in California, except that the value of property in Los Angeles is quite significant compared to many other areas of California. Los Angeles Family Court judges routinely make orders relating to the disposition of a family residence at divorce. Usually, the judge simply approves an agreement between spouses. In other cases, the judge will entertain a trial, hear evidence, and then issue a decision as to what happens to the house.
So how is a house divided in Los Angeles divorce? To answer that question, let’s pose some hypothetical situations that may be similar to your circumstances, and the analysis that follows from each situation. Please note that these hypotheticals do not describe how each parties’ interest in the marital home is divided when the home was acquired by one party before marriage or when one party made a separate property contribution to the acquisition of the property or to its improvements. A more detailed explanation of those issues can be found here.
HYPOTHETICAL SITUATIONS:
The parties own a home and have an agreement on how to divide the home:
In situations where parties agree to terms on how a marital home should be divided upon their divorce, the court will almost always honor that agreement provided that the parties enter into the agreement freely, voluntarily, and free from fraud, duress or coercion.
One party wants the house, the other does not:
When one party wishes to keep a house upon dissolution of marriage in Los Angeles, and the other party does not want the house, the court can simply award the house to the party that wishes to keep it after finding that the property has a specific value. Usually, the recipient will be responsible to pay the mortgage, taxes and insurance for the property and will need to obtain a refinance. The recipient of the house must then pay the other party one-half of the community’s interest in the net value of the property.
Both parties want the house:
When both spouses in a Los Angeles divorce case want to keep the house, the court can listen to testimony about why each party wants the house, weigh the factors regarding whether either party can afford to buy out the other party’s interest in the home, consider whether the parties’ children will have access to the home via either parent, and determine whether other assets in the division of property can be used to “offset” either party’s interest in the home. In many cases, however, even though both parties wish to keep the house, the court will simply order the home to be sold and the net proceeds from the sale will be split between the parties accordingly.
Neither party wants the family residence:
If neither party wants to retain the marital home upon divorce, the parties will simply sell the home and divide the proceeds according to their agreement.
OPTIONS FOR A FAMILY COURT JUDGE AT TRIAL
If a divorce case proceeds to trial in Los Angeles, the family court judge will have significant discretion in determining what to do with a marital home. Generally, the options are to award the property to one of the parties, order the property sold, or order the deferred sale of the property.
WHAT IF THERE IS A MORTGAGE?
Most marital residences have a mortgage lien that is tied to the house. If the parties agree or the court orders the house sold, the mortgage is simply paid off at closing. In most cases where one party is allowed to keep the family home, the court will require the party that retains the marital home to refinance the mortgage into his or her own name within a certain period of time. When parties have an agreement that one party is allowed to keep the home, it is important to have an expertly drafted settlement agreement that contemplates all the things that might happen if the recipient of the home does not refinance the mortgage.
WHAT IS A DEFERRED SALE?
In rare cases, Los Angeles family court judges will order the “deferred” sale of the house. This simply means that the property is required to be sold at some time in the future. There are only two ways that the court will order a family home sold at a later date.
First, if the parties agree to a deferred sale the court will almost always approve their agreement. However, it is extremely important to have a detailed agreement concerning the terms of the deferred sale including the timelines for sale, how the realtor is selected, which party is required to pay for the mortgage, taxes, insurance, repairs, and so forth during the deferred period.
Second, a party might convince their L.A. Family Court judge to allow a deferred sale based on the best interests of a minor child. When a court finds that there is a compelling need for a child to remain in a home, the court is permitted to allow the deferred sale. Usually, these findings are reserved for situations where a child with special needs utilizes the home that has been specially retrofitted to suit his or her needs, or where a child needs to stay in the home for educational purposes for some relatively short period of time, or other similar situations.
CONTACT OUR OFFICE TO LEARN MORE
If you anticipate that the disposition of a family home will be an issue in your case, contact our office today for a free consultation. We are happy to review your case and provide you with some general information that may assist you. If you decide that our office is a good fit to represent your interests, we are happy to discuss ways that we can help. Don’t hesitate to call, however, because the longer you wait to take action could have severely negative repercussions on your rights and obligations.