Who Gets the Family House in a California Divorce?

For many couples (especially those without minor children), the family home is the most important matter to be settled in divorce. It’s often the most valuable asset the couple owns, where their children grew up, and a source of emotional attachment. Unsurprisingly, when divorce arises, couples often wonder what will happen to the family home. The answer, of course, depends on many factors, and the outcome is often more complex than a 50/50 split. Divorcing couples should thus familiarize themselves with all of the possible scenarios. Here, our Stockton divorce attorneys break down what can happen to the family home in a California divorce.

California Is a Community Property State

California is a community property state, meaning that all marital assets are divided 50/50 upon divorce, absent a prenuptial agreement or some other mechanism. (This is in contrast to equitable distribution states, in which marital property is split according to equitable principles, which may not be a 50/50 split.) Generally, property purchased during a marriage is considered to be community property. As such, houses purchased during the marriage using marital earnings typically belong to both spouses, even if only one spouse earned most of the income or only one spouse’s name appears on the mortgage. 

At the same time, California family law also recognizes separate property, which generally includes: 

• Property owned before the marriage
• Gifts received by one spouse
• Inheritances received by one spouse
• Property acquired after separation

The challenge in many divorce cases is determining whether the family house constitutes community property, separate property, or some combination of both. For more information about disentangling mixed assets, please speak to a Stockton divorce attorney. 

If the House Was Purchased During the Marriage 

This is the simplest and most common scenario, as many couples purchase homes after they get married. In that scenario, the house is treated as community property subject to equal division. However, that does not necessarily mean each spouse receives half; courts may order (or the couple may agree) to resolve the issue in one of the following ways: 

One Spouse Buys Out the Other Spouse

One of the most common outcomes is simply for one spouse to buy out the other by paying their share of the equity. 

For example, consider the following scenario: 

• The home is worth $900,000
• The mortgage balance is $500,000
• The community equity is therefore $400,000

Under the community property rule, each spouse is entitled to approximately $200,000 (i.e., their share of the equity). 

The House Is Sold

If the spouse keeping the home does not have sufficient assets to pay the other off, an alternative option is to sell the home. Upon sale, the parties simply pay off the mortgage and divide the remaining proceeds among themselves. Selling the property can help to avoid future fights over maintenance costs, refinancing, taxes, or deferred repairs, as could be the case if one party buys out the other and stays in the home. 

The Parties Continue to Co-Own the Home

In some cases, the parties may agree to continue to co-own the home, either temporarily or permanently. This is an attractive option for couples who wish to avoid immediate disruption or have children they want to keep in the same school. In this scenario, the couples may agree that one parent will remain in the home until a set date, that the house will be sold at a set date, and that the sale proceeds will be divided according to a negotiated formula. 

What if One Spouse Owned the House Before the Marriage? 

Separate property is property acquired before marriage, so if the house is acquired before marriage, it must be separate property, right? Not in all cases. A situation often arises in which, even though one spouse bought the house before the marriage, the other spouse makes contributions to the house — most significantly through assistance with mortgage payments — that can create a community interest in it. (This is particularly true of long-term marriages.)

In such cases, California courts apply the Moore/Marsden rule to determine how much interest the community (i.e., the marriage) acquires in a separately owned home during marriage. Under this rule, the community may acquire (1) a proportional ownership interest based on principal reduction paid with community funds, and (2) a share of the property’s appreciation attributable to those contributions. Thus, even though the home started as separate property, the community can still be entitled to a substantial portion of the equity. For more information about property division of houses purchased prior to marriage, please speak to a Stockton divorce attorney. 

Who Gets to Stay in the House During the Divorce? 

Temporary possession during the divorce process is often a tricky issue. In some cases, one spouse voluntarily moves out while the other remains in the home. But if the spouses cannot agree, courts may issue temporary orders regarding occupancy of the home. Such orders generally are based on the following factors: 

• Which parent has primary custody of the children
• Whether conflict in the home is an issue
• Financial ability to maintain the residence

Readers should note, however, that post-separation use of a family home can form the basis of additional financial claims between the spouses. For example, the party who remains in the home after the separation may owe reimbursement to the community (i.e., rent) for the reasonable value of that use. Conversely, a spouse who pays community obligations using separate post-separation income may seek reimbursement from the other spouse. This scenario could arise, for example, where only one spouse pays the mortgage after separation using their post-separation earnings. The payor spouse could then seek reimbursement credits during property division. 

A Stockton Divorce Attorney Can Help You Reach a Resolution

Possession of the family home is often a fiercely debated (and, in some cases, litigated) aspect of many divorces. Spouses who disagree about who should remain in the home would therefore be well-served by seeking professional counsel. For more information, please contact a Stockton divorce attorney at McKinley, Conger, Jolley & Galarneau by using our online form or calling us at 209-477-8171.