Deferred home sale -San Diego Divorce Lawyer (858) 922-7098
Deferred home sale of family residence- San Diego Divorce Lawyer
In a divorce case in California, parties with small children are often faced with having to downsize from the family home. Due to new post-divorce economic realities, the family home is often sold. The court retains the power, however, to order a deferred sale of the family home. That is, the court allows one parent (sometimes called the in-spouse) to remain in the home with the children for a period of years. In order for the court to make such an order, it must consider a number of factors.
Deferred home sale determined in Marriage of Braud
The seminal case on this subject is In re Marriage of Braud (1996) 45 Cal.App.4th 797. In that divorce case, the husband had paid off the mortgage on the family home using separate property funds, which entitled him to a reimbursement of that sum of money. The wife (the in-spouse) requested and was granted a deferred sale of the family home until the youngest child (who was 5 years old at the time of trial) turned 18.
In considering the issue of deferred sale of the family home, the court was first required to determine whether it was “economically feasible” to maintain the house payments (including mortgage principle, interest, taxes, insurance, and maintenance) using the following factors: (1) the resident parent’s income; (2) the availability of spousal and child support; and (3) any other sources of funds to make the house payments. The legislative intent behind the economic feasibility determination is to avoid default on the payments of house-related debts and resulting foreclosures, to avoid inadequate insurance coverage, to prevent deterioration of the condition of the family home, and to prevent any other loss of the parents’ equity in the home.
In Marriage of Braud, the in-spouse had extremely limited earning capacity and had practically no assets besides her community property interest in the home. The out-spouse (father) had significantly greater earning capacity and substantially greater assets, including a limited interest in some real property which also allowed him to live on the property rent free.
Deferred home sale Court findings in Marriage of Braud
The court found that it was economically feasible for a deferred sale to be ordered because, despite the limited earning potential of the in-spouse, she received child support which was sufficient to cover the carrying costs of the house (there was no longer a mortgage). That was not the end of the inquiry. The court then had to determine whether it should use its discretion to order the deferred sale.
In exercising its discretion to grant or deny a deferred sale of home order, the trial court is required to weigh and consider all available evidence bearing on the following: (1) The length of time the child has resided in the home. (2) The child’s placement or grade in school. (3) The accessibility and convenience of the home to the child’s school and other services or facilities used by and available to the child, including child care. (4) Whether the home has been adapted or modified to accommodate any physical disabilities of a child or a resident parent in a manner that a change in residence may adversely affect the ability of the resident parent to meet the needs of the child. (5) The emotional detriment to the child associated with a change in residence. (6) The extent to which the location of the home permits the resident parent to continue employment. (7) The financial ability of each parent to obtain suitable housing. (8) The tax consequences to the parents. (9) The economic detriment to the nonresident parent in the event of a deferred sale of home order. (10) Any other factors the court deems just and equitable.
The trial court used its discretion to grant the request for deferred sale. The appellate court noted that the trial court obviously considered the economic detriment the out-spouse would suffer from the deferred sale of home order, and partially ameliorated that problem by awarding him an offset for the loss of use of his separate and community property interests in the house. That is, because the out-spouse was unable to access—and derive income from—his separate property claim to the home’s equity, as well as his share of the community property interest, the court offset that loss not by charging the in-spouse rent, but by reducing his child support payments.
Speaking of rent, the Family Code expressly permits a downward departure from the presumptive correct amount of child support (as determined under the statewide uniform child support guideline) where a deferred sale of home order has been entered. That is, the formula amount of child support may be adjusted downward to the extent the rental value attributable to the out-spouse’s ownership interest exceeds the mortgage payments, homeowner’s insurance, and property taxes.
Frequently, neither party has a separate property interest in the marital residence. But it is common that both spouses are entitled to significant equal community property interest in the equity in the home, especially in divorce cases in San Diego which has high real estate values. It is not mandatory that the proportion of would-be rental profit be equal to the proportion of out-spouse’s separate and community property interest in the equity. The court could order that the out-spouse only receive credit for the proportion of the equity attributed to his or her separate property interest. Or, the court could order the offset to represent the separate property and part of the community property proportion. The bottom line is, the court has discretion to fashion an order—as long as it does not abuse its discretion—once the court has considered the factors above.
Normally, a party to a divorce who makes a separate property contribution toward the purchase of a family home (or as in Marriage of Braud, pays off the mortgage on the home subsequent to the purchase) is only entitled to reimbursement of the amount of the contribution—not any proportional appreciation in the value of the home after that contribution. If, however, the court orders a deferred sale and separate property reimbursement award, the separate property contributor is entitled to the appreciation of the residence from that date of the order to the time of the sale in the proportion of the equity in which the out-spouses owns an interest.
The division of a family home is not as cut and dried as the division of other assets, especially when a divorce case involves minor children.
If you are considering a divorce in San Diego and needing help with understanding community property, you should seek the advice of a divorce attorney. The San Diego Divorce Attorney at the Law Office of Michael C. MacNeil have many years of divorce law experience and will competently represent you. Please call for a no-cost divorce attorney consultation at (858)922-7098. We look forward to helping you with any of your questions about divorce in San Diego.
This San Diego Divorce attorney blog post is not intended as legal advice and should be considered general information only.