For many couples, their family home is the single biggest asset they’ve invested in over their adult lives. As much as a third of your monthly income may go directly to a mortgage payment. Even more may get spent to upgrade and beautify your living space. It’s only natural, then, to worry about what will happen to it in a divorce. Educating and informing yourself about Colorado divorces can make your divorce easier on everyone involved.
Despite what you may have heard from other people, there’s no absolute means of predicting how the courts will rule in a divorce. Colorado is a marital property state, meaning that the courts seek to fairly divide your marital assets between both spouses in a divorce. Generally speaking, that will include the home you purchased with your spouse.
Homes purchased during marriage are usually marital property
Everything you own ends up classified as either marital property or separate property. Marital property ends up divided, but separate property remains yours after the divorce. Separate property usually includes assets you owned prior to marriage, inheritances and gifts from other people. Gifts from your spouse before marriage (not purchased with marital assets) are usually also separate property.
If your home was an inherited home or a property you owned outright prior to your marriage, it may remain your separate property. Many factors can influence this, including how much upkeep or financial investment your spouse contributed toward the home. If you purchased the home during marriage, even if only one of you had a job, the house is likely marital property.
Handling the house is a case-by-case decision
There is no straightforward solution to dividing a home in a divorce. The courts need to consider a number of important factors, including the length of the marriage, the contribution of both parties, the needs of and custody arrangements for any marital children, and more. The spouse with custody of the minor children may receive the home as well, as a means of limiting the changes the kids have to go through in the divorce.
When one spouse receives the home, he or she will need to refinance the property. Doing this protects the other spouse from any financial obligations for the home. It also removes that spouse from the deed. In some cases, cashing out equity can compensate the other spouse for his or her claim to the home. Other times, assets of comparable value may offset the equity in the home.
If neither spouse can qualify for a mortgage without a co-signer or if there are other potential issues, the courts may order the divorcing couple to sell the home. Generally, that means splitting the proceeds between spouses. Carefully reviewing your financial documents and family situation can help you understand the more likely outcomes for the house in your divorce.