Investing in real property is generally a smart money move. Married couples may combine their incomes to qualify for a mortgage and buy a home instead of renting. They may also purchase unimproved land or properties in poor condition to treat as investments.
The acquisition of real estate can lead to long-term financial benefits for many couples. Unfortunately, real property holdings can also create challenges when couples decide to divorce. Whether they own the home where they live, multiple rental properties or vacant parcels of land, their real estate holdings can become a source of conflict during divorce.
What do spouses often disagree about in relation to real estate during a divorce?
Who owns the property?
Particularly in scenarios involving investment properties or vacation homes, only one spouse may have their name on the title. Other times, one spouse may have owned the house prior to marriage and may assume that it is their separate property. However, the use of marital resources to acquire, maintain or improve real estate can constitute commingling. Both spouses may have at least a partial interest in properties regardless of whose name is on the paperwork.
What is the property worth?
Establishing an inventory of marital assets requires not just the identification of what is separate and what is marital property but also what those assets are worth. Couples who rely on purchase prices may have significantly outdated ideas about the value of their marital estates. It is often necessary to hire an appraiser to determine what real property is currently worth and how much equity the couple has accrued. The value of each real estate holding can play an important role in the final division of property.
What happens with individual properties?
Spouses may disagree intensely over which one of them should stay in the marital home. They may also have a hard time agreeing on the final disposition of investment properties. It can be a challenge to equitably divide the value accumulated in the marital home or to fairly share multiple investment properties.
Individuals preparing for a complex divorce involving valuable property may need help protecting themselves. Understanding the conflicts that arise related to real estate holdings in a divorce can prepare people for negotiations and help them set reasonable expectations.
