Divorce and Real Estate

Joint property real estate likely represents the majority of all the assets to be divided in a divorce settlement agreement. You must determine the fair market value of the joint property, which is basically equity minus any debts that are secured by the property. The joint property includes not only the family home, but also any other types of real estate that may be community property, including vacation homes, rental properties, commercial properties, undeveloped land, and special use real estate such as mineral and water rights. Each of these has unique circumstances that will determine how they are eventually handled in the divorce settlement agreement.

One way of thinking is to treat all joint properties as if they are to be sold outright in the final divorce settlement. If one of the parties to the divorce wishes to gain full ownership of any of that property (one common example being to continue to live in the primary dwelling) the transaction would be treated as if they are the buyer of the property. In such a situation, keep in mind that upkeep of the property such as loan payments and tax liabilities becomes the burden of the newly sole owner. Other than determining the fair market value for the purpose of property ownership during divorce the history of your community property is also a factor in determining things like the division of mineral rights in divorce agreements.

History of Community Property Real Estate Ownership The history of the property can affect how the division of marital property will be divided. Property brought to the marriage or inherited during the marriage poses the question of whether or not the property has become joint property or remains the property of one of the parties to the divorce settlement. Not only the history but also the future must be considered. Any future financial or environmental risks that will fall to the new owner, should be considered as a cost that must be evaluated when determining the division of equity. Properties that are intended for special use or bear mineral or water rights might also be affected by the history of the property. For example, in terms of what benefits have accrued to date and what a reasonable expectation of future benefits might be. Again, evaluation of any financial or environmental risk falling to the new owner may have an effect on the equity itself and therefore on the divorce and real estate negotiations. Appropriate counsel should be sought to help clarify and quantify these issues. Review these five key factors about your real estate that affects the handling of the joint asset or the distribution of net proceeds from a sale of assets in a settlement agreement.

• Identification of the type of real estate and the type of ownership interest you have in the joint 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 value of the real estate.
• The plans you must make to pay for and maintain the real estate as the divorce is pending.

Although it is relatively rare amongst married couples, some property may be held as tenants in common specifically when the separating couple have children that are affecting their choices surrounding the marital breakup. In some divorce cases, previously jointly owned property is changed to tenants in common so that the property (again, such as the primary residence) may be held despite the inability of either party in the divorce separation agreement to maintain the property in its entirety. Children involved may affect this choice. It is important to consider all of the implications of an arrangement like that of tenants in common.

It may also be the case that there is a prenuptial agreement in affect detailing the parties separately defined percentages of ownership over property and which frees them to handle their share as they wish.

Both husband and wife may want to thoroughly review their options independently to evaluate the pros and cons that stem from each option available to them. One particular agreement that is suggested during negotiations or a legal separation may not be in the best interest of the other party.

If you would like a free initial consultation with a local divorce lawyer based on your zip code complete the form on this page. A legal representative will set up a no obligation appointment for you.

Ask yourself these questions:

1. Have you identified all of the affected joint properties?
2. Have you taken into account that some properties that might appear to be joint property at first glance are not joint property because of the history of the property?
3. Have you fairly evaluated both their equity and any liabilities against them?
4. Have you identified issues such as financial or environmental risk that may make the true equity of the joint property difficult to establish?
5. Have you consulted appropriate experts about these issues?

With some help you will be able to prepare a documented history of your home ownership for each piece of 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 estate is:

• 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.

At first glance, the family home may appear to be the easiest asset to identify and describe. However, the description of your interest in ownership of your home and other real estate can be complicated as we have discussed. As with the division of personal property, the rules and laws regarding the division of divorce assets in a settlement vary from state to state. Consult with a lawyer about your rights and responsibilities and put together your divorce and real estate worksheets. Gather the necessary documents and records about each piece of real estate. Get the documents for all the property in which you or your spouse has an interest in ownership. 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 interests.

By filling in the associated form we can provide you with a free initial consultation with a local divorce lawyer based on your zip code to help you get a further idea of your options. A legal representative will set up a no obligation appointment for you.