Divorce can be a stressful time for the whole family. In an ideal situation, the divorcing spouses can readily come to an agreement regarding what to do with their finances, custody arrangement, debts, expenses, and real estate. However, this harmonious scenario is not guaranteed, and the divorcing couple may need assistance with moving ahead in their lives and arranging for the post-marital distribution of property, including the family residence. If you need help dividing real estate in divorce, consider contacting an experienced attorney at Colorado Divorce Law Group by calling (720) 593-6442 to schedule a consultation to review the legal process with you and help you choose your best path forward.
During divorce proceedings, courts often presume that the equity in a home will be divided equally by the divorcing partners. Equity is usually calculated by valuing the house and then subtracting the amount of the mortgage and any other debts connected to the home. To ensure that this equity evaluation is up to date, the couple may want to consult with real estate agents or professional appraisers to assess the home’s value. From there, the divorcing spouses will have a few options regarding what they can do with the home.
If children are involved and one parent has primary custody, the judge in a divorce case may consider awarding the family residence to the parent with primary custody. Otherwise, a judge may order that the house be sold and the proceeds of the sale be divided between the divorcing spouses. If neither spouse wants the home, or if neither can afford to keep it alone, the divorcing couple may also decide to sell the property and divide the profits. Before pursuing this option, the spouses may wish to first determine the financial impact of selling the home, as the costs of selling it will come out of the marital estate.
The divorcing spouses will also need to include in their calculations the cost of the remaining mortgage, any other debts or expenses associated with the home, and any capital gains taxes that may result from the sale of the home. Only after these expenses have been covered will the couple be able to split any profits.
If it does not make financial sense to sell a home, or if one of the spouses wants to keep it, the divorcing couple can come to an agreement to allow the spouse who wishes to keep the home may buy it from the other spouse. These spousal buyouts can be arranged in a variety of ways, including paying for the home in installments, paying for the home in a lump sum, exchanging other assets for the home, or forgoing alimony in exchange for the home.
While buyouts can offer a path toward equitable distribution of real estate in a divorce, they cannot guarantee a harmonious resolution. The spouse selling the home may easily feel that he or she has been cheated of a fair share if the home appreciates in value after the sale. The spouse buying out their former partner, on the other hand, risks significant financial burden if the home depreciates or the mortgage payments increase. Divorcing partners considering spousal buyout as an option for dividing real estate in divorce may wish to consult independently with family attorneys to discuss the possible financial risks and benefits of such an arrangement.
A third option that the divorcing spouses may want to consider is to co-own the home. This option may be especially attractive when the couple has children and wants to maintain domestic continuity for these young family members as much as possible. Co-owning the home may also be considered in cases in which it is not feasible for the couple to sell the house because the divorce occurs at a time when the real estate market is unfavorable to sellers.
If the spouses choose co-ownership of the home, they must carefully consider the logistics of their situation, such as making arrangements to take turns living in the home while the children stay there. They will also need to take into account the ongoing costs of any mortgage and the amounts that both parties will be expected to contribute to it, which can impact the ability for either former spouse to purchase another house. If you are dividing real estate in a divorce, a knowledgeable divorce attorney at Colorado Divorce Law Group may be able to help you evaluate your options and understand the ramifications of each scenario so you can choose a path forward that fits your family’s needs.
As the American Bar Association indicates, if a couple has a prenuptial or postnuptial agreement that specifies what happens to real estate in the event of a divorce, such a document may cover disposal of the family residence and other real property. However, the language used in prenuptial and postnuptial agreements varies, and it can be difficult for most agreements to account for all possible circumstances in advance. Therefore, a spouse who signed such an agreement may wish to review the document with a divorce lawyer who can help determine whether the signed agreement is enforceable and what options remain open.
Another factor that former partners may wish to consider when dividing real estate in divorce is whether any state laws might impact the property division. For instance, Colorado is an equitable distribution state. According to the revised statutes of the state of Colorado, equitable distribution means that if a couple cannot come to a resolution by themselves regarding the division of their property, the court will divide the property in a way that is deemed fair to both parties but may not necessarily be equal.
While Colorado’s courts do not consider marital misconduct or fault when it comes to dividing marital property, they do consider the following elements:
Dealing with real property during a divorce can be a challenging undertaking, filled with many difficult decisions. If you want further information regarding this process and your options for dividing real estate in divorce, consider contacting an experienced divorce attorney at Colorado Divorce Law Group by calling (720) 593-6442 to request your free case evaluation.