Littleton Real Estate and Family Law Blog
by Craig Franklin Chambers, Esquire
Vol. 1. 73
April 2, 2016
The Littleton Lawyer
As a family law and divorce attorney and a real estate attorney in Littleton, Lakewood, Denver, Centennial, Highlands Ranch, Ken Caryl, and the surrounding areas, home values often come into contention. A home is often the parties' most valuable asset, especially now that the market is appreciating.
The marital home value is an important issue in the equitable division of property in a divorce which is also a factor in determining spousal maintenance or alimony. Colorado law provides for an equitable division of property.
The first question is whether the home is marital, non-marital or pre-marital. The Court only has jurisdiction on marital assets, which are assets acquired during the marriage.
If one party owned the home prior to the marriage, the home is pre-marital, and the equity established prior to the marriage is not subject to division. Similarly, if the home is inherited, the home is non-marital property, and not subject to division.
However, in both of these instances, the appreciation of the home during the marriage is subject to division by the Court. Further, if the party who owned the home outside the marriage places the other party in title --- including a refinance of the home --- the home becomes a gift to the marriage, and the entire amount of equity is divided as marital.
The second thing to understand, the division of marital property is not necessarily equal. Colorado is not a 50/50 state. A judge will divide the asset equitably, basing his decision on the factors in the statute which includes the abilities of the parties to meet their financial needs and the necessity of stability for the children in the marriage to remain in the marital home.
If the home is a primary residence, the courts often divide the home 50/50; if the home is a rental property, an argument can be made for the division to be based on the contribution of the parties.
The third thing to consider: if the home is sold, either by agreement of the parties or as a court-order made by the judge at permanent orders, the proceeds are divided after all of costs are paid at closing, including the real estate commission and closing costs. If the home is not being sold, the costs of sale are not considered in the valuations. This could be a 6% commission plus closing costs.
A 6% total real estate commission on a $300,000 home is $18,000 which is not included in the math if the home is not to be sold. For this reason, the parties in the divorce need to plan what will happen to the property in the divorce.
Is one person able to cover the mortgage until Permanent Orders? Do the parties want a quick sale or are they not in any hurry? Are there tax consequences to the sale? Is the sale court-ordered or is one party going to try and buy out the other party? These are some of the issues you need to consider in developing a strategy in your divorce.