What Happens to the Family Home in a Divorce?

As a family law attorney, I find that often one of the first questions a client poses is about what will happen to the family home. I‣ve been asked “does the wife always keep the home?” and “do you always have to sell the house?” Unless you and your spouse have entered into some prenuptial or postnuptial agreement, your home, much like your other assets and debts, will be divided according to California Community Property Law. Thus, if the home is a community property asset, meaning if it was acquired by the parties or a party using income earned during the marriage, generally, the equity in the home will be divided equally.

Thus, were the home to be sold, you would be awarded one-half the value of the home minus the debts owed. If one spouse wishes to remain in the home, generally they may do so if the other party‣s interest can be bought out. For example, if your home has $100,000 of equity, you and your spouse each have an interest in $50,000. Thus, if you wanted to keep the property you would buy your spouse out of the home by paying a $50,000 equalization payment. Spouses sometimes trade off other assets, such as retirement accounts, to equalize the division. Another important consideration is if you will be able to make the mortgage payments on your own after separating from your spouse.

Things can get more complicated if you change up the facts a bit. If one spouse used their separate property to put the down payment on the house, that spouse may have a right of reimbursement for their separate property contribution to the community asset. For example, if your husband used savings he acquired before the marriage (which would be his separate property) to put $40,000 down on the home at the time of the purchase, when the home is sold in the divorce, he may have a right to a reimbursement of $40,000.

Much of the confusion as to what happens in a divorce comes from potential litigants consulting their friends and neighbors rather than a family law attorney. If you or someone you know is a homeowner and is contemplating a divorce it is imperative that advise of a family law attorney is sought. With expert help you may be able to hold on to that house after all.