How to Split House in Divorce in Los Angeles, CA

How To Split a House in Divorce in Los Angeles, CA

After years of building a life together, it can be hard to figure out what’s yours and what’s theirs. It gets even trickier because each state, including California, has its own property laws. So, on top of navigating the emotional rollercoaster of divorce, you’ll also need to get familiar with how property is divided in California – and that can get complicated. Don’t let yourself get lost in the details or end up with the short end of the deal. Use this guide to understand the basics, so when you sit down to negotiate, you can walk away with what you deserve. 

Two Kinds of Properties in Los Angeles 

When couples decide to divorce, their assets are divided into two categories: community property or separate property. Property, in this case, doesn’t just refer to land or houses. It essentially includes everything a person owns, both personal and real property. Real property refers to land and anything permanently attached to it, such as houses, buildings, and other structures. On the other hand, personal property covers everything else, like bank accounts, vehicles, jewelry, retirement plans –  truly, everything. 

Hence, it’s important to know whether something is considered community or separate property

Community property 

Real and personal property are considered community property if they were acquired during the marriage. This means assets obtained during the marriage are jointly owned by both spouses. Only nine states recognize community property laws, and California is one of them.

This generally includes:

• Money earned during your marriage 
• Assets purchased with community money 
• Assets gifted to both spouses 

For example, if you bought a house with the money earned during your marriage, that house would be considered community property. 

Separate Property

Real and personal property are considered separate property if they were acquired before the marriage. This means assets obtained before the marriage are owned separately by each spouse. In the event of a divorce, separate property typically remains with the original owner and is not subject to division during the proceeding. 

However, determining whether something qualifies as separate property can be a bit more complicated, as it’s still possible to acquire separate property during a marriage. For example, if you use money you earned before the marriage to buy a house during the marriage, then that house is arguably separate property (as long as it’s your name alone on the title.)

Items inherited by, or gifted to, one spouse are also considered separate property. For example, if your parents leave you the ancestral home, that property remains yours alone, even if you inherited it while you’re married. 

This generally includes:

• Money earned before the marriage 
• Money earned from separate property (e.g., rental homes)
• Assets gifted or inherited by a single spouse 
• Assets purchased with separate funds 
• Assets acquired after the separation are with separate funds 

Be aware: Not all property comes with perks. Married couples can also incur debt, which can either be community or separate property, following the rules above. 

Comingling and Transmutation: When Separate Property Becomes Community Property 

Of course, there are exceptions to the rules above. Separate property can become community property through a process known as commingling or transmutation. Be cautious, as commingling can happen unintentionally or without your explicit approval, unlike transmutation. 

Commingling commonly occurs when community property funds are used for separate property expenses. For example, if you purchased a house with separate property funds but later used community property funds for repairs and maintenance, the house could be considered community property. Even though you initially bought it with separate property funds, the combination of the commingling of assets could result in the house being classified as community property. 

Another example is if you inherited money, which is considered separate property, but you deposit it into a joint bank account with your spouse. In that case, that money could be considered community property. 

That’s how easy it is to commingle property. That’s why it’s best to keep separate property, well… separate. 

Transmutation, on the other hand, is more intentional. It requires the signature of both parties, or just the party who owns the property, along with explicit approval through a contract. This agreement states that what was once separate property is not community property. 

For example, if you purchased a car before getting married and later decided to make it the family vehicle, you might create an agreement where both spouses jointly own it. 

Commingled and transmuted property can be difficult to evaluate, so it’s best to seek legal guidance to ensure an accurate assessment.  

Is Your House Community or Separate Property?

Before you can decide on your next move, you need to determine whether your house is considered community or separate property. Here are some general guidelines to help you figure it out:

The house could be considered community property if: 

• It was purchased during the marriage using community funds. 
• It was purchased or gifted before the marriage but commingled by using community funds for its upkeep, mortgage payments, renovations, etc. 
• It was gifted to both spouses.
• The title is in both spouses’ names. 
• It served as the primary marital home. 

In cases where the title is only in one spouse’s name, the house would still be considered community property if it falls under any other category above. 

The house could be considered separate property if:

• It was purchased before the marriage and kept separate. 
• It was purchased during the marriage using separate funds. 
• It was gifted or inherited by a single spouse. 

Understanding your home’s value and getting the right legal advice can help you make confident, informed choices during a divorce. If selling the property is the next step, working with a company that buys homes in Los Angeles and other cities in California can provide a faster, smoother path forward.

Marital Agreements: Did You Sign A Postnuptial Or Prenuptial Agreement?

Los Angeles’ community and separate property laws can be superseded if you and your spouse signed a postnuptial or prenuptial agreement. 

A postnuptial agreement is a legal contract signed by both spouses after marriage (but while still married) which outlines specific terms, usually including how assets will be divided in the event of a divorce. 

A prenuptial agreement serves the same purpose as a postnuptial agreement, with the only difference being that it was signed before entering the marriage. 

These agreements can contain a wide range of terms, so it’s important to review them carefully, ideally with an attorney, to see if the house is specifically mentioned.

For example, if both spouses agreed that in the event of a divorce, the wife would keep the marital home, then that agreement would generally stand, even if community funds were used to purchase or maintain the property. 

Deciding Ownership of the House During Divorce

Once it’s established that the house is community property, the next big question is: who gets the house after the divorce? Generally, there are two ways this can be decided: through mutual agreement or court intervention. 

1. Spouses Come To An Agreement

The best-case scenario is when both spouses can mutually agree on who keeps the property. In most divorces, the couple initially has the power to decide how assets are divided, whether it’s a 50/50 split or through an asset-offset arrangement. 

This process is often much smoother if a valid marital agreement (such as a prenuptial or postnuptial agreement) is already in place and not contested. 

Keep in mind, compromise is key when negotiating asset division. Problems arise when spouses cannot come to an agreement. Hire skilled lawyers and even possibly a neutral, third-party mediator to assist you in the process.  Disagreements can delay the process and even drag it out for years. 

In the worst case, if an agreement cannot be made, then court intervention becomes necessary. 

2. Court Intervention 

Let’s face it, when it comes to divorce, nothing is black and white and not all divorces end amicably. This is when spouses can ask a judge to step in and help move the proceeding along. 

In these situations, the judge will divide community property in a way that is fair and equal. This doesn’t necessarily mean a strict 50/50 division of each asset, but rather a fair distribution of the assets as a whole. Factors that the court may consider include:

• Who maintained or cared for the property 
• What funds were used for the purchase or improvement of the property 
• Whether one spouse would be left at an economic disadvantage 
• Whether children are involved and how custody may affect living arrangements 

In some cases, the judge may even order the forced sale of the home and its proceeds to be divided between the spouses. Of course, if separate funds were used to pay for the down payment of the house, you can implore the court for reimbursement. 

For divorcing couples, reaching an agreement on their own is often the best route, as it gives both parties more control over the outcome. However, when that’s not possible, involving the court can be a necessary and fair way to ensure each spouse receives what they’re legally entitled to. If selling the home is part of your settlement, working with cash home buyers in San Diego and surrounding California cities can simplify the process and reduce stress.

How To Split A House In Divorce 

There are multiple avenues that a divorcing couple can take to ensure they get their fair share.  Depending on your situation, you can: 

1. Sell The House and Split the Proceeds 

The simplest option is to put the property up for sale and then divide the proceeds. While selling the house might seem like the easiest route, it can get complicated once you dive into the details, especially when it comes to how the profit is split. 

If the divorce is amicable and both parties want to move on quickly, a 50/50 split of the proceeds may be the most straightforward solution. 

However, there are deductibles and contributions that both spouses will need to agree on before any payout is made. For instance, if you hire a real estate agent to represent both of you, their commission will be deducted from the final sale amount, along with any taxes incurred from the sale. If one spouse covered the mortgage payments or made the down payment, they might expect a larger share of the proceeds. On the other hand, the other spouse may argue that their care and maintenance of the property helped preserve or even increase its value. 

All of these factors can complicate the process, meaning the final split may not be perfectly equal, but ideally, it will be fair based on each person’s contribution.

In addition to dividing profits, the couple must decide who will manage the sale process. Will the property be sold as-is, or will repairs be made to raise its value? Who will cover the cost of those repairs? Selling as-is is typically faster and more convenient, but may result in a lower profit. On the other hand, taking the traditional route in a home sale can take several months or even a year, due to repairs, staging, and waiting for the right buyer. This can drag out the divorce proceedings, keeping both parties legally tied to the property. 

So to avoid the hassle, don’t leave the negotiating table without first discussing and agreeing on the expected sale price, timeline, method of sale, and how the profits will be divided.  

2. Co-ownership 

It’s also possible for both parties to retain joint ownership of the property even after a divorce. While this option can be challenging and requires a detailed, ironclad contract, it may be especially appealing to divorcing couples with children. In such cases, a legal agreement may be drafted allowing the parent with primary custody to remain in the marital home until the children turn 18. After that point, the couple might agree to sell the home or even transfer it to their child, depending on the terms outlined in the agreement. 

This type of arrangement is often chosen to provide stability for the children during and after the divorce. 

In this arrangement, both spouses retain legal responsibility over the property and any cost for its upkeep, since it continues to be jointly owned by both. 

3. Buy Out One Spouse 

In cases where one spouse wants to keep the property, they could buy out the other’s share.  A buyout is a good option for couples who used their family home as the marital residence. This way, the spouse who wants to keep the home can do so, while the other receives their fair share of its value.   

This process typically involves hiring a professional appraiser to determine the property’s fair market value, ensuring both parties know what their share is worth. Of course, appraisal costs, taxes, mortgage balances, and potential reimbursements are usually deducted from the base value to ensure a fair and accurate payout. 

Even if the property has been appraised, it’s still up to the divorcing couple to decide how much one will pay to buy out the other. This option often requires careful negotiation to keep both parties satisfied. Ideally, the buyout amount results in each person’s fair share, but in some cases, one spouse may request a higher amount based on financial contribution or other factors. 

That is, if the other party even agrees to the buyout, there are cases where this doesn’t happen since a buyout must be voluntary. 

4. Asset-Offset 

Similarly, if the other party doesn’t want to be bought out with cash, they may agree to an asset-offset. An asset-offset is when one keeps a particular asset, and the other receives a different asset of equal value.  For example, if the wife wants sole ownership of the marital home, the husband might receive the vacation home or other investment of similar value in return. 

That said, this option may come with more risk than a traditional cash sale. Some assets can lose value over time, involve high upkeep costs, or create unexpected tax burdens. It’s essential to carefully evaluate the worth, stability, and financial responsibilities associated with each asset. This helps ensure a fair exchange and protects your long-term interests. To better understand your options, here’s how Eazy House Sale can help.

Final Thoughts: A faster option to sell your home

Going through a divorce is tough, especially when you’re forced to make major life decisions, like dividing assets while dealing with emotional stress. Therefore, it’s important to get ahead of the process by familiarizing yourself with Los Angeles property laws to ensure that you walk away with the fair share of the life you helped build. 

California, being a community property state, comes with its own set of legal complexities. But with the right legal counsel and real estate professionals on your side, the experience can be manageable. 

Want to sell your home fast for cash?

If you’re thinking about selling your home and want a stress-free option, consider working with us at Eazy House Sale.

We specialize in helping homeowners sell quickly, without the usual hassles of showings, repairs, or long waits. We know that selling your home during a divorce can be overwhelming – and we’re here to take that burden off your shoulders. We can close in as little as 7 days, leaving you with cash in hand and one less thing to worry about. 

Selling to real estate investors like us simplifies the process so you can move on to the next chapter of your life with ease.