With Justice for ALL (quote from the pledge of allegience U.S.A.)
This is an informational website offering support not legal advise
Divorce and Your Real Estate
Disposition of the family home frequently causes problems in a
divorce. Custodial parents may want to hang onto the home for the sake of the
children. Perhaps one or both spouses can't afford to purchase a similar replacement
home. Much depends upon the amount of equity in the home and the ability of
each spouse to keep it.
The following is a portion of a chapter from Divorce Strategy that contains information to get you started on the road of evaluating your divorce decision about your real estate.
For most couples the family home is the highest valued asset they
will have to divide in their divorce. Its division is usually fraught with controversy
for varying reasons. It may be difficult to value, is not readily converted
to cash, costs a substantial amount of money to maintain and has implications
of federal and state tax liability. As if all those things were not enough,
your family's emotional attachment to your real estate, in particular a family
or vacation home, can cause you to make an irrational or poor decision at the
time of the divorce. Your family may be haunted by that decision for years after
Some questions that you need to answer are:
" Should you sell the family home?
" Do you keep it until the children are grown?
" Should you keep the home and buyout your soon to be ex-spouse, or vice versa?
" Can either of you afford to keep it after the divorce?
The answers to these questions and others can help you avoid or
plan for problems associated with your real estate. Historically, the family
home is the asset that most often causes controversy both before and after a
The principal reason for this problem is the timing of the sale
of the home and the division of the net proceeds. Both events frequently occur
some time after the divorce. In addition, couples seldom plan as they should
for the payment of household maintenance and upkeep during the pendency of the
divorce. At first glance the family home appears to be the easiest asset to
identify and describe. For purposes of a divorce, the description of your ownership
interest in your home and other real estate can be very complicated with pitfalls
for the unwary. As with the division of personal property, the rules and laws
regarding the division of real estate vary from state to state. Consult with
your lawyer about your rights and responsibilities after you have read this
section and put together your worksheets.
Before you see your lawyer, gather the necessary documents and
records about each piece of real estate. Get the documents not only for the
property titled in your name, but for all the property in which you or your
spouse has an ownership interest. This includes property that you own in either
of your names alone, jointly with another person or property owned by a trust
or business in which either of you have an interest.
Key Factors -
There are six key factors about your real estate that affect the handling of the asset or the distribution of the net proceeds from the sale of the asset in a divorce. The factors are:
" identification of the type of real estate and the type of ownership interest you have in the property
" the ownership history of your real estate
" real estate, income and capital gain taxes
" debts, such as loans and tax liens, that are secured by the real estate the value of the real estate
" the plans you must make to pay for and maintain the real estate during the pendency of the divorce and afterward
The following sections describe in detail these six factors.
As previously mentioned, most couples own an interest in real
estate in the form of a family home. Other types of real estate that you may
own are vacation property, rental property, commercial or office buildings,
buildings on land leases, vacant land, mineral rights and other types of special
use real estate. Whatever type of real property you may own, each one has unique
features that could affect how you can utilize it in your divorce, especially
in the context of a settlement agreement. The following sections of this chapter
contain examples of some of the methods you might use.
How you hold title to the real estate may determine, in large part,
what interest you and your spouse have in the real estate. Most
married couples own property as tenants by the entirety and each spouse has
an undivided one-half interest in the property. A divorce ends the ownership
in tenancy by the entirety. Joint tenancy is similar to tenants by the entirety
except that the owners are usually not married to one another. In joint tenancy
and tenants by the entirety, if one of the owners dies, the deceased person's
interest passes to the other owner by operation of law. Another way of holding
title is as tenants in common. The interest owned by each tenant in common is
divisible and can be inherited by the owner's heirs. This is customarily the
way that unrelated persons, including divorced people, own real estate together.
It may be the way that you and your ex-spouse own your real estate after the
History of Ownership
It is important to establish and document the history of your
real estate ownership because each parcel's history affects the property's net
worth. For example, real estate has tax implications that are usually assumed
by the person receiving it in a divorce. Additionally, the history of your real
estate helps you determine if the real estate that was owned before the marriage
or inherited during the marriage is marital or separate property. Finally, the
history of the land usage enables you to analyze the financial and environmental
risk, if any, you could incur from owning the property.
Prepare a history of your home ownership for each property you have owned, including those which you have sold. Make notes about any miscellaneous information that is important about the real estate. Put together any source documents you used to back up your information. Organize your documents so that your history table is the first document in your real estate file. Then attach the supporting documents in descending or ascending order to the file folder.
Some of the relevant information you need for each piece of real
" Address, purchase price and date purchased
" Down payment amount and source of funds for the down payment
" Original loan amount and current balance
" List of improvements you have made and their cost depreciation claimed on any prior year's tax return
" Insurance proceeds received from any claim
" Costs to repair any damages or restoration costs
" Date sold, sale price, costs of sale and net proceeds