What Is the Family Residence?
The family residence is the home where the spouses lived during the marriage. It may be a house, condominium, townhouse, or other residential property.
In divorce, the family residence is usually discussed as part of the overall division of assets and debts. The home may have equity, a mortgage, a home equity line of credit, tax issues, title issues, or reimbursement claims that need to be resolved.
Community Property and the Family Residence
California is a community property state. If the family residence was purchased during the marriage with community funds, it may be community property.
Community property generally means both spouses have an interest in the asset, even if the property is titled in only one spouse's name. Title matters, but it does not always fully determine how the home will be characterized in divorce.
If the residence is community property, the equity is generally divided equally unless the spouses agree otherwise or another legal rule applies.
Separate Property and the Family Residence
A family residence may be separate property if one spouse owned it before marriage, received it as a gift, inherited it, or purchased it with separate property funds.
However, even when a home started as separate property, the community may still have an interest if community funds were used to pay the mortgage, make improvements, or increase equity during the marriage.
This can create mixed-character property, meaning part of the home may be separate property and part may have a community interest.
Title Does Not Always Decide the Issue
The way title is held is important, but title does not always end the analysis.
For example, a home may be titled in one spouse's name but still have a community property component. A home may also be titled jointly even though one spouse contributed separate property funds toward the purchase.
Because title, timing, source of funds, and conduct can all matter, the family residence often requires careful review before the divorce judgment is prepared.
Common Options for the Family Residence
In a California divorce, the family residence is often handled in one of several ways. The best option depends on the equity, mortgage, income, children, tax issues, title, and whether one spouse can afford to keep the home.
- the home is sold and the net proceeds are divided
- one spouse buys out the other spouse's interest
- one spouse keeps the home and refinances the mortgage
- one spouse receives the home and the other receives other assets
- the parties temporarily co-own the home after divorce
- the court reserves certain issues for later determination
Sale of the Family Residence
If neither spouse can keep the home, or if both spouses agree to sell it, the divorce judgment may provide for sale of the residence.
Sale terms should be clear. The judgment may need to address listing price, realtor selection, repairs, payment of selling costs, access to the property, acceptance of offers, mortgage payments until sale, and division of net proceeds.
A vague sale provision can lead to disputes after judgment.
Buyout of the Family Residence
A buyout means one spouse keeps the home and pays the other spouse for their share of the equity.
A buyout usually requires determining the value of the home, mortgage balance, equity, and any reimbursement claims. The judgment should state the buyout amount, deadline for payment, refinance obligations, and what happens if the buyout is not completed.
If both spouses are on the mortgage, the spouse keeping the home may need to refinance or otherwise remove the other spouse from the loan. A divorce judgment does not automatically remove a spouse from mortgage liability.
Mortgage Responsibility
The divorce judgment should address who is responsible for the mortgage, property taxes, insurance, homeowners association dues, utilities, repairs, and other carrying costs.
This is especially important if the home will be sold later or if one spouse will remain in the residence while the divorce is pending.
If both spouses are on the mortgage, the lender may still consider both spouses responsible, even if the divorce judgment says one spouse must pay. For that reason, mortgage and refinance language should be drafted carefully.
Exclusive Use of the Residence
During a divorce, one spouse may remain in the family residence while the other spouse moves out. In some cases, the parties agree who will stay in the home. In other cases, the court may be asked to make temporary orders about use of the residence.
Exclusive use of the home is separate from final ownership. A spouse may temporarily live in the home without ultimately receiving the home in the final property division.
Reimbursement Claims
The family residence may involve reimbursement claims.
For example, one spouse may claim they used separate property funds for the down payment, improvements, or mortgage payments. A spouse may also claim reimbursement for payments made after separation.
Reimbursement issues can affect how equity is divided. These claims should be addressed before the judgment is finalized.
Date of Separation and the Home
The date of separation can affect the family residence in several ways.
Mortgage payments, principal reduction, improvements, debt, rental value, and reimbursements may be treated differently before and after separation. If spouses disagree about the date of separation, that disagreement may affect the financial analysis of the home.
Children and the Family Residence
When spouses have minor children, the family residence may also be connected to custody and stability issues.
A parent may want to remain in the home so the children can stay in the same school, neighborhood, or routine. This may affect temporary living arrangements, but the home still needs to be divided according to property law.
Custody concerns and property division are related in practical ways, but they are legally separate issues.
The Family Residence in an Uncontested Divorce
In an uncontested divorce, spouses may agree on what happens to the home. The agreement should be specific.
The more specific the agreement, the less room there is for future conflict.
- whether the home will be sold
- whether one spouse will keep the home
- the value of the home
- the mortgage balance
- the buyout amount
- the refinance deadline
- responsibility for payments before sale or refinance
- responsibility for repairs
- division of sale proceeds
- transfer deed requirements
- what happens if a party does not cooperate
The Family Residence in a Default Divorce
In a default divorce, the court may be limited by what was requested in the Petition. If the Petition does not properly request orders involving the family residence, the court may not be able to include certain terms in the default judgment.
For this reason, the Petition should be reviewed carefully before requesting default when a home is involved.
Deeds and Title Transfers
If one spouse is awarded the family residence, additional documents may be needed to transfer title. This may include an interspousal transfer deed or other deed documents.
The divorce judgment should clearly state what each spouse must sign, when the documents must be signed, and what happens if one spouse refuses to cooperate.
A judgment alone may not be enough to complete all title, refinance, or lender requirements.
Common Problems Involving the Family Residence
Because the family residence is often a major financial asset, mistakes in the judgment can have serious consequences.
- disagreement over value
- disagreement over whether the home is community or separate property
- one spouse refusing to sell
- one spouse refusing to refinance
- one spouse unable to qualify for refinance
- dispute over mortgage payments
- dispute over repairs or improvements
- separate property reimbursement claims
- post-separation payment claims
- missed mortgage payments
- home equity line of credit issues
- title transfer issues
- tax consequences