Getting divorced is hard enough and the division of real property can make it even more contentious. Often, real property is one of the largest assets to be divided and considerable money could be at stake. Add in a dash of emotion (memories were made there, and children raised), not to mention the headaches of moving and the prospect of uprooting children, and it is really no wonder that real property division can be such a major source of fighting. Inevitably, the same questions come up at the beginning of case after case. Family law practitioners are often asked these questions:
• The house is in my name only/my spouse’s name only/both names. Does that matter?
With limited exception, no. If the property is an asset of the marriage, it is irrelevant whose name is on the deed. Just because only one person is in title does not keep it from being a marital – and, thus, divisible – asset.
• My spouse is threatening that the house will have to be sold. Is that true?
Not necessarily. Generally speaking, the property will either be kept by a party or it will be sold. Which option is appropriate in any given case will depend on who wants the property, and that person’s ability to financially support it and to buy out the other’s interest. If the parties cannot reach an agreement as to who is keeping the property, then the court is probably going to force a sale.
• How do we divide the house?
While it’s true that there are documented cases of parties dividing homes with chainsaws and walls, as a practical matter the property is going to be divided by dividing its equity. If it is sold, the equity is easy to figure out. It’s on the check that you get from the title agency, and the question is simply how the net proceeds of the sale should be allocated. But if one party is going to keep the real property, then the question is at what price does the retaining party buy out the other?
The buyout price would be one-half of the marital value. The marital value would be the fair market value (as determined by agreement or an appraisal), less any outstanding debt owed on the property and accounting for any separate property interests on either side. In a buyout situation, the retaining party may be expected to come up with some cash for the buyout, or else the buyout price may be offset against some other asset. Outstanding liens may have to be refinanced into the sole name of the retaining party.
• I put money into the house/owned the property before the marriage/inherited the property. Can I get it back?
As long as it’s traceable, separate property can usually be recouped. However, traceability can be challenging when it comes to real property because of several competing factors. Often, marital funds are being used to build equity, via things like mortgage paydown and renovations, and it can be difficult to determine which part of the equity is marital and which is non-marital, especially in volatile markets. And, often, needed records were lost to time or never kept at all.
• What about real property that we don’t live in?
The same analysis applies whether the property is your primary home, an investment property, a vacation property, or even a home that you maintain for an adult child. Rental income does not typically factor into the property division – except if its income earning potential makes it more valuable – but rental income would be considered in other financial aspects of the divorce, such as for support purposes.
Each situation is unique and there are numerous caveats to each answer. It is always best to consult with a domestic relations attorney for a more thorough analysis of your specific situation.
This article originally appeared as a column for the Cleveland Jewish News.