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What community property laws mean for your California real estate

On Behalf of | Aug 6, 2021 | Property Division

Buying real estate is a popular way to diversify financial holdings. You and your spouse may have bought multiple vacation homes that you occasionally enjoy yourselves but frequently rent out for short-term use to others, providing a stream of income.

Maybe you provide residential rentals for long-term leases or buy houses to fix up and flip. Even unimproved land can be a valuable investment and a way to protect your finances against losses if the stock market tumbles or other areas of the economy slow down.

Any real estate that you purchased during your marriage or with money you earned during the marriage will probably be subject to division under California’s community property rules. Does that mean you have to sell your investment real estate?

The courts can enter specific orders for property division

In a litigated or contested divorce, a California family law judge has to look at your property and divide it. Your financial records and testimony in court can influence what the judge feels is fair and appropriate.

Depending on your personal economic situation and other property, a judge could very well order the sale of certain assets with the expectation that spouses will split the proceeds. Judges also have the authority to simply assign certain properties to certain spouses. Trying to allocate properties of similar values to each spouse may be the preferred approach if both spouses rely on their accumulated real property for income.

You don’t have to leave this decision up to a judge

Letting someone else determine how you split your property may not be the best solution for you and your ex. Although a judge will try to be reasonable and fair, there may be more information than they can reasonably retain and analyze about your circumstances.

If you feel strongly about retaining specific pieces of property, then you may want to consider collaborative divorce or mediation. By working with your ex to settle your property division outside of court, you can prioritize retaining the assets that matter the most to you or that will provide you with the strongest foundation for the future.

Learning about what happens during property division in a California divorce can help you decide what approach might work for your family.