How to Handle Real Estate after a Divorce

In this digital age it seems that nearly every form of communication is electronic. Couples email each other knowing they’ll get it and it will be read at some point and not have to place a phone call to an office and perhaps end up on voicemail. Twitter is a favorite as well and it appears it’s really a favorite with Donald Trump.

But those 140 characters in each tweet can bring good news or not so good news. When couples decide it’s time for a divorce, most often those tweets are anything but nice. And owning real estate together only complicates the matter.

In so-called Community Property states, of which California is one, property that is acquired prior to getting legally married remains in full ownership with the party that acquired the asset.

That means if a home is bought and owned by one party as a single person and then later marries the new spouse does not have any legal interest in that property. That is unless the owner of the property grants partial ownership in the home and records that interest with the county clerk.

When a couple acquires a home together after they’re married, both have an equal interest in the real estate purchased. Most often, ownership of a newly acquired home is done so as joint tenants where each individual owns an equal portion of the home.

Yet later should the marriage dissolve the home is most likely the single largest asset the couple owns. What are the options?

The first is to sell the home and split the proceeds. That is the simplest and most common approach. Or, the couple can agree not to sell and keep the home as a rental property. The owners could agree that one party will continue to occupy the home and the other ex-spouse must find a new place to live.

The divorced couple could decide which individual would be responsible for the mortgage payment or whether to split the monthly payment. All of these decisions will be part of the final divorce decree and has the rule of law. Agreements outside the divorce decree must be approved by the courts.

It’s important to note that the mortgage payment and title are two different things here. One party may file a quit claim deed taking the non-occupying spouse off title but that does not remove that person from being responsible paying the mortgage payment.

If one spouse is responsible for making the mortgage payment as listed in the divorce decree, if payments fall behind, both parties will find the delinquent payments on their individual credit report. The only way to remove one individual from the mortgage is to refinance the loan in its entirety and qualify as an individual.