Divorce Settlements and the Family Home
The family home can be the center of sanctuary and security after divorce, but it many cases it is also the largest asset. While emotionally difficult, typical divorce settlements usually result in either the sale or a buyout of the family home. What typically happens is the house is sold and the proceeds are divided. The split may not always 50/50, such as when a percentage of the house is not community property. In some situations, one spouse can buy out the other one with special considerations.
Sale of the Family Home
The financial aspect of the sale of the family home in most California divorce settlements is often as simple as choosing a real estate professional, cooperating in the sale process and having a stipulation and order in place for the proceeds of the sale. An experienced divorce attorney can draft the stipulation and order. It is then approved and signed by the spouses, parties, lawyers and the judge.
A family law attorney can also explain the term “characterization” of the proceeds such as whether the spouses agree that it will be community in whole or community and separate in specific percentages or numbers. The characterization of the real estate will make a difference in how much each spouse gets after the sale of the family home.
Buyout of The Family Home
A buyout occurs when one spouse wants the home and is willing to pay the other spouse for it. For example, if a house has $400,000.00 equity and the house is community property in its entirety, the spouse seeking to buyout the home from the other spouse may agree to pay $200,000.
However, negotiated buyouts are rarely as simple as 50% agreement. For example, the spouse buying out the other spouse may argue that the buyout cost should be less than 50% since a sale on the market would include expenses such as real estate agent commissions. Another consideration in the buyout of a home is understanding the current and upcoming real estate market. Real estate markets change often and can go from stable to volatile. There is also the issue of how the title to the home will change after a buyout by one spouse. Because these are important considerations, advice from a real estate attorney or a financial advisor is often necessary.
Selling you home in divorce can be an emotional experience, but it is important to understand your rights under California community property law. Again, getting the advice of a divorce lawyer is critical in getting all the benefits you are entitled to from the sale or buyout of your family home.