three brick houses

A Tale Of Three Houses: Community Property, Separate Property, or Inheritance

Goldberg Jones Divorce, Featured Posts, Finances, Goldberg Jones Radio Leave a Comment

During a divorce, the division of property takes up a great deal of time. If you don’t have a great deal of shared property, it can be relatively simple. However, it doesn’t take much to complicate the process. Some items offer a straightforward, clear-cut path. Others, less so. Houses are a big one that commonly causes hang-ups.

For most of us, houses are the biggest purchase we’ll ever make. As such, they’re usually the biggest asset on the table to divide in a divorce. But many factors complicate this.

Where you got the money for the down payment, if you still owe on the mortgage, if one or the other spouse owned the home before you married, equity, sweat equity, whether or not you used communal funds to make payments. All of these and muddier the waters when it comes to real estate.

We hear questions about this all the time. Including on the radio. One of our founding partners, Rick Jones, regularly appears on the Danny Bonaduce and Sarah Morning Show. There he takes calls from listeners who have family law issues. In a recent episode, a caller wanted to know how to protect her property in an upcoming divorce.

Listen to the Call Below:

Caller: “I’m thinking of leaving my husband. We don’t have any kids, but we do own three houses between us. One of them I owned before we got together, and one of them we bought together. The third my dad actually left me when he passed away earlier this year. I don’t really care about the house we bought together but I’d like to know how to protect the other two that are mine.”

Rick’s Answer:

Rick: “The first thing I’m going to do is caution you to say things like you just finished with which is, ‘I really don’t care about the community house, but I want to protect these other two.’ You’ve got to look at all three. So in order to protect the two that are most important to you, you can’t just give away that third one.

“This is almost a classic bar-exam example of how to characterize an asset.

  • “There’s community property, which generally means it’s shared because you bought it during the marriage.
  • “There’s separate property, which is things like what you came into the marriage with. There can be a little confusion, because if you came into the marriage with a home that you still had a mortgage on, and you’ve had some equity that you paid down while married, there may be some community in-roads.
  • “Lastly, the house you inherited, especially if you inherited it free and clear, inheritance is definitely a recognized piece of separate property, so that should be a relatively slam dunk for you.”

Related Reading: Her Parents Gave Us Money, but I Made the Payments. Who Gets the House?

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