Family Home in Divorce Part III
By Warren R. Shiell
The following information is specific to California.
What are the options for dividing the house?
There are three options if you are trying to reach a settlement:
(a) One spouse buys out the community interest share of the other spouse;
(b) The house is sold and the proceeds are divided; and
(c) The house remains in joint names for a limited period of time and is then sold to the other spouse or is put on the market.
During economic downturns when house prices are depressed couples increasingly turn to the last option.
But there is a catch. If you litigate, option (c) is called a deferred sale order (or a “Duke Order”) and the Court can only order a deferred sale in very limited circumstances where it is in lieu of child support and economically feasible. FN3.
Should I keep the house or exchange it for other assets?
It is very important to consider the financial as well as the legal realities of electing to keep the house. It is used to be very common where the husband owns a business to suggest that the wife keeps the house and the husband keeps the business. Before even getting into whether this is a fair exchange of assets of equal value, one has to consider whether the spouse who wants to keep the house can afford to do so. Often the spouse who has primary custody of children wants to stay in the house for the sake of the children but this may not be economically possible. The spouse who wants to stay in the home should sit down and work out a budget. They should estimate housing costs and compare this with their estimate earnings from employment, support and other sources. Housing costs are more than just mortgage and property taxes and one should factor in utilities, repairs, insurance, fees etc. You may also be entitled to mortgage interest deduction relief lowering your costs. If you can still afford to stay in the house, only then should you consider this option.
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