Divorce & Mortgages in California

by Erika Johansen
Spouses often dispose of their mortgage during divorce.

Spouses often dispose of their mortgage during divorce.

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California's system of marital property division is known as "community property." Under community property laws, disposition of a house and mortgage during divorce will often depend on how and when the owners acquired the house.

Community Property

Under California's community property rules, any property acquired by a married person during the life of the marriage is presumed to be community property, owned by both parties and subject to equal division if they divorce. Property is also considered community property if purchased with shared marital funds. For example, if a wife buys a house and places it in her name alone, but pays for the house (or its mortgage) with marital funds, such as money from a joint checking account shared with her spouse, the law will presume the house is community property. However, either spouse may present evidence during divorce proceedings to prove otherwise.

Separate Property

Any property that a spouse owned before marriage is generally considered separate property, meaning the owner gets to keep the property after divorce. However, if one spouse owns a house, but both spouses use it as the marital home during the marriage, the house, or a portion of its value, may become community property, especially if marital funds were used to make mortgage payments or maintain or improve the property.

Divorce and Mortgage

Divorcing spouses often decide (as part of their divorce agreement) to sell a family home in order to pay off the joint mortgage. If any profit remains afterward, the spouses will typically divide this profit equally. However, if a family home is mortgaged in both spouses' names and one spouse receives the home in the divorce, that spouse typically must refinance the home in order to release the other spouse from the mortgage obligation.

Use During Separation

During separation and trial, if one spouse stays alone in the home, a judge may order that spouse to pay back the community for his use of the home. If one spouse pays community debt, such as mortgage payments, using his separate property during this period, the court may choose to reimburse him from the community assets. Generally, if one spouse gets primary custody of minor children in a divorce, that spouse has the right to stay in the family home during (and even after) the divorce process. Typically, the spouse in the home must make mortgage and other payments on the property, but courts may also order the other spouse to pay a portion of these costs in the interest of fairness.