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Real Estate and Divorce

Rarely do couples enter into a marriage with thoughts of its failure and divorce. Most couples share their assets and debts in accordance with California's Community Property laws.

The primary asset in most marriages is the Marital Residence. If it was purchased during the marriage it instantly becomes joint property even if only one spouse is listed on the Grant Deed. This means each party owns Fifty (50%) of the Net Equity. The exception being if one spouse put down a portion of the initial down payment from their sole and separate property and can prove it. They would be then entitled to receive this amount back, off the top, when the property is sold or refinanced to buy out the other party.

A problem comes up when one party already owns a home before the marriage. The new spouse has NO interest in the value of the property which exists on the date of the marriage. ALL of this net equity belongs to the spouse already with title. However, after the date of the nuptials any increase in value becomes a joint asset. This is based upon the theory that any mortgage payments made by either property are made from the joint property nature of that person's salary.

During the discussions of a divorce settlement one party may want to buy out their spouse's interest in the home. To accomplish this the house will need to be appraised, or if the parties agree, use a Comparative Market Analysis (CMA), done by an experienced real estate professional. Normally the party being bought out would receive one-half of the value minus the current mortgage indebtedness and the cost of the ReFi. There will be NO deduction for broker's fees as the property is not being sold.

An exception to all of these considerations is when the parties enter into a Pre-Nuptial agreement prior to the date of the marriage or into a Post-Nuptial after the wedding has taken place. This document will cover the ownership of any and all property owned by the parties and its disposition in the event of a divorce. So long as the contract is created in accordance with certain legal formalities it will be upheld by the Superior Court. Pre-Nups are more common in second or third marriages when one spouse has more assets already in their name and do not want a long, protracted divorce battle.

Couples considering Divorce or Legal Separation should consider Divorce Mediation as a way of ending their marriage. This process is private, confidential and non-adversarial. The mediator is a Neutral third party whose function is to come up with a Marital Settlement Agreement which is Fair, Reasonable and Equitable in the same nature as would a judge in a contested divorce. The cost of mediation is significantly lower than those charged by divorce lawyers.

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Rich Gordon's picture
Principal Mediator

A Fair Way Mediation Center offers a relaxed, compassionate atmosphere in an informal setting that encourages a calm and objective approach.  This is a safe space that avoids the stress and embarrassment that courtroom procedures can inject into any divorce or separation.  All couples are welcome, whether traditional or same sex families. An experienced Mediator, Mr.  Gordon has worked in all facets of alternate dispute resolution (ADR), with both individuals and organisations.  He brings a friendly approach that is conducive to cooperation.