If you own a house or condo in California, it's probably your most valuable asset. So when you're getting a California divorce, one of the difficult issues will be deciding who will keep the family home. You'll need to consider a number of things, including who owns or has an interest in the property, whether either of you can afford to keep it, where your kids will live if you have children at home, and taxes. Here's an overview of the issues related to dealing with a house after divorce.
In a California divorce, a couple's community property will be divided between them (either as part of their settlement agreement or by the judge after a trial). Each spouse will usually keep their own separate property.
So the first step in figuring out what will happen to the family home is to determine whether it's community property (belonging to both spouses) or separate property (belonging to one of them).
In California, property that spouses acquire during their marriage is community property, except for gifts, inheritances, and profits or rents on separate property (such as a second home or business that was owned before the marriage). Also, California law presumes that all property spouses acquire during the marriage as joint tenants is community property, unless they have written proof otherwise—such as a clear statement or a written agreement that it's separate property. (Cal. Fam. Code §§ 760, 770, 2581 (2023).)
So, for instance, your house would be community property—and both you and your spouse would have an equal interest in it—if you:
Of course, it's not always that simple. For example, say you and your spouse bought home during the marriage, but the title is in your spouse's name only. Based on the title, the law presumes that the home belongs to your spouse as separate property. You might be able to overcome that presumption by proving the two of you had an agreement that you both owned the house. But you'll need strong evidence to back up your claim. (Cal. Evid. Code § 662 (2022).)
A home that a spouse bought before marriage is generally that spouse's separate property. The same might be true if one spouse inherited a house during the marriage. But if the other spouse has contributed money toward paying off the mortgage or making improvements on the property, that spouse would have an interest in the home and would be entitled to reimbursement for that interest (more on that below).
There are three basic options for dividing a community property house in a California divorce: a buyout, an immediate sale, or a deferred sale.
If you have enough other assets besides the family home, one of you may decide to take full ownership of the property and pay the other spouse for their share—an arrangement usually known as a buyout. Here's how it works:
Particularly in the California housing market, many people will find it difficult to come up with the money to pay their spouse half of the equity on a home. But remember that you don't have to pay your spouse in cash. Other options include:
You'll usually need to refinance anyway, in order to remove your spouse from the mortgage. But there are serious financial hurdles to taking out a big enough new loan for a buyout. (Learn more about refinancing and negotiating a buyout of the family home.)
In addition to finding enough assets for a buyout, you'll need to consider whether you'll be able to handle the ongoing costs of keeping the house, including mortgage payments, insurance, and property taxes. You should also speak with a tax consultant to learn about the tax consequences of a buyout.
You may agree (or the judge may order you) to sell the family home and split the profits from the sale. This is often the only feasible option when neither of you is in a financial position to buy out the other. If your home is "underwater"—meaning you owe more on the house than it can be sold for—you and your spouse will share equally in the loss.
In some situations, it may make sense to continue to co-own the family home after the divorce and sell it at a later date. For example:
California judges may order a deferred sale of the family home in order to allow the custodial parent to stay there with the children, but they must first determine whether it would be economically feasible in light of the custodial parent's income, the availability of child support and spousal support, and any other sources of funds to make the mortgage payments.
If a deferred sale is economically feasible, the judge will also consider the following circumstances before making a decision:
(Cal. Fam. Code §§ 3801, 3802 (2023).)
Whatever happens to the family home in a divorce, one of the spouses may be entitled to reimbursement in the following situations:
As with all issues in divorce, you'll save a lot of money and stress if you and your spouse can agree what to do with your house rather having a judge decide for you after a trial. You can get help negotiating a settlement in mediation, but you may need expert advice to help you understand the tax consequences and other financial considerations.
An experienced family law attorney can also help you understand how other issues in your divorce (like spousal support, child custody, and child support) are connected to what you do with the family home. And if you aren't able to reach an agreement with your spouse, you'll almost certainly need a lawyer's help to fight for your rights.