When parties get divorced, the way in which the real estate is titled can determine what may happen with the property. If the real property is acquired during the marriage, it is presumed to be marital property regardless of how the property is titled. However, how the property is titled can affect how the court can distribute the property.
Does How the Real Estate is Titled Matter?
The spouses may agree how to divide their real estate or the court may take evidence at trial and decide how to distribute the real estate. Spouses may enter into a Property Settlement Agreement (PSA) that dictates who will take what property, regardless of how the property is titled. In a PSA, there are several options available to the parties that are not available to the court. First, one spouse can sign over their entire interest in the property to the other spouse or sell all or part of his or her interest to the other spouse. Second, both spouses can agree to the sale of the property. Third, one party may give the right to the other party to remain in the marital home for a certain period of time. Parties can also agree to allow one spouse to remain in the house while it is appraised; fix the equities of the parties as of that date; then allocate whatever appreciation may be attributable to the house to the party who then continues to make the payments. Afterward, that person gets whatever increase or decrease in value that there may be at the time the house is actually sold. Because of complications in appraising the value of real property, in addition to tax consequences of its sale and transfer, it is important to enlist the assistance of an experienced divorce attorney in drafting a PSA.
What if there is no PSA?
In the absence of a PSA, real property division is made by the court. When the real estate is titled in both parties, the court has the power to partition the property or order the transfer or division of jointly owned marital property, or any part thereof, to one of the parties. Many marital homes are jointly titled, having been taken by the parties “as husband and wife, as tenants by the entireties.” When the real estate is jointly titled, the court has the authority to (1) order the transfer of real or personal property or any interest therein to one of the parties; (2) permit either party to purchase the interest of the other party and direct the allocation of the proceeds, provided the party purchasing the interest of the other agrees to assume any indebtedness secured by the party; or (3) order its sale by private sale by the parties, through such agent as the court shall direct or by public sale as the court shall direct without the necessity or partition.
When the real estate is titled in only one party, however, the court has no power to transfer the property to the other party, and the property remains under the sole ownership of the spouse who owns title. In this circumstance, however, the court may still order the owning spouse to make a payment to the other spouse based on the value or equity of the property.