Dividing Real Estate in a Divorce
Getting a divorce is stressful enough; having to discuss money is often an unwelcome topic, but it is necessary. In finalizing a divorce, couples must have a written agreement on how their assets, particularly real estate, if they have any, should be divided. During such division, many couples get into heated arguments about who has the right to specific assets. However, the division of the asset must be finalized, and a judge in a family court must deem it fair before the divorce can go through. So keep reading to learn more about the basics of dividing real estate in a divorce.
Separate Properties Vs Community Properties
One of the major issues that arise during marital dissolution is the characterization of property. Southlake is a state that recognizes community property. However, a property can be characterized as community property, separate property, and even quasi-community or mixed-character property. As such, the name on the asset title does not by itself determine who has the right to the property, but rather the time and source of funds used in purchasing it.
A separate property is any property that a spouse purchases before the marriage with separate funds. On the other hand, a community property is any property purchased during the marriage using income earned during the marriage. To determine who qualifies for a separate or community property, our marital dissolution lawyer in Southlake advises keeping thorough documentation of financial records, property titles, and agreements.
Both Parties Agree to Sell and Split the Equity
When real estate is community property, an option couples have is to sell the property and split the equity. Proceeds from the sales can help all parties in covering the down payment for a new home or with relocating. In a situation where the property was a separate property but both of you contributed to the renovations, splitting the equity after sales is not going to be fifty-fifty. Also, if the proceeds from the home sale are part of the divorce settlement, then the divorce cannot be finalized until the house sells.
One Party Agrees to Buy Out the Other
A buyout is another scenario that happens when dividing real estate in a divorce. In this situation, a spouse can pay off any previous mortgage on the home and the other spouse what they are owed. A lot of times, a spouse buying out the other spouse has a lot to do with personal reasons. For instance, the spouse buying out the other loves the house or does not want to deal with the hassle of relocating. Additionally, buying out the other spouse speeds up the divorce agreement.
Both Parties Agree to Defer Sales until a Later Date
In a situation where a couple owns real estate investment properties, they can choose to defer sales. While the couple defers sales, if it is a rental property, the rental proceeds will be split between them according to the percentage in which each party contributed to the property development. Another reason why a couple may decide to sell the property later is if selling it will cause too much upheaval. In either scenario, the agreement will be put into their settlement paperwork.
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