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How Homes are Divided in Colorado Divorce Cases

When a couple divorces in Colorado, the family home often falls under the classification of marital property, irrespective of whose name appears on the deed or the manner of ownership. If the home was acquired during the marriage and before a legal separation decree, it’s considered marital property so long as the home is not the seperate property of either spouse through gift or inheritance.

What is Marital Property?

Marital property encompasses all assets acquired during the marriage, such as real estate, financial accounts, vehicles, and other jointly owned possessions.

Contrary to assumptions, in Colorado, marital property, including the family home, isn’t automatically split equally (50:50) during divorce proceedings. Instead, the court looks into individual circumstances to suggest a fair division, following the equitable distribution principle.

What is Equitable Distribution?

Equitable distribution is a legal principle used in divorce cases to divide marital property fairly between spouses. Unlike community property states where assets acquired during marriage are typically divided equally (50:50) between spouses, equitable distribution states, like Colorado, aim to ensure a fair and just division of assets based on various factors.

In equitable distribution, the court considers multiple factors to determine how assets should be divided. These factors may include:

  • Each spouse’s financial contribution to the marriage, including income and assets brought into the marriage.
  • The duration of the marriage.
  • Each spouse’s earning potential and financial needs.
  • Any agreements made between the spouses, such as prenuptial agreements.
  • Custody arrangements and each spouse’s contribution to childcare and homemaking during the marriage.
  • The tax consequences of asset division.
  • Any wasteful dissipation of marital assets by either spouse.
  • Any other relevant factors deemed important by the court.

Equitable distribution does not necessarily mean an equal division of assets, but rather a division that the court deems fair based on the circumstances of the marriage. The goal is to achieve a distribution that is equitable and just, taking into account the contributions and needs of each spouse.

It’s important to note that separate property, such as assets acquired before marriage or through inheritance, is typically not subject to equitable distribution unless it has been commingled with marital assets during the marriage. it can, however, be considered when dividing marital property.

What Assets are Excluded from Marital Property?

When it comes to property division in divorce, certain assets are typically excluded from consideration as marital property. These include:

  • Inherited Properties: Assets received through inheritance by either spouse are generally regarded as separate property and not subject to division during divorce proceedings.
  • Gifted Properties: Similarly, assets acquired as gifts to either spouse are typically considered separate property and not subject to division in divorce.
  • Post Legal-Separation Assets: Any assets acquired by either spouse after the legal separation has been initiated are typically excluded from marital property considerations.

However, complications can arise when separate property becomes mixed or commingled with marital assets during the marriage. Legal assistance is often necessary to properly classify such assets and ensure a fair distribution.

Can I Evict My Spouse from Our Home?

In Colorado, you can’t just kick your spouse out of the house during a divorce. Both of you have a right to stay there until the divorce is sorted out, unless a judge says otherwise.

There are exceptions, like if there’s immediate danger or violence, where one spouse might get the green light to stay solo in the house for a bit. Also, if one spouse owned the house before the marriage, they might have grounds to ask the other to leave. But mostly, it’s up to the court to decide who gets to stay in the house during a divorce, taking into account things like money, kids, and safety.

It’s smart to talk to an attorney to understand your options about staying in the house during a divorce in Colorado.

How Children Affect Property Division

Post-divorce, the fate of the marital home often hinges on court decisions, particularly when children are part of the equation. Below are several scenarios illustrating how the court might handle the marital home:

  1. Sale of the Marital Home: In a divorce where neither party can afford to maintain the marital home on their own, the court may order the sale of the Colorado property. Proceeds from the sale would then be divided between the spouses according to the court’s directives.
  2. Granting Exclusive Occupancy Rights: Only in rare and difficult situations, the court may grant exclusive occupancy rights to the other spouse. For instance, if there’s a history of domestic violence, the court may order the abusive spouse to move out while allowing the other spouse to remain in the home until the divorce is finalized.
  3. Temporary Residence Arrangements: In cases where one spouse cannot immediately afford to move out and establish a new residence, the court may allow them to stay in the marital home temporarily. This temporary arrangement ensures both spouses have a place to live while the divorce proceedings unfold.

These scenarios highlight the various ways in which the court may address the marital home post-divorce to prioritize the well-being of both parties and any children involved.

Financial Responsibilities of the Home During Divorce

In terms of financial responsibilities during divorce proceedings, both spouses are typically expected to continue meeting their financial obligations, including paying the mortgage and utility bills, until the divorce is finalized. Failure to do so can have consequences and may impact the outcome of property division.

What Are My Options in the House-Split?

When a couple goes through a divorce, they typically have three choices regarding their shared home. Regardless of their decision, the first step involves determining the home’s value, often through an appraisal.

With all types of divorces, we advise joint appraisals to avoid turmoil. Once the divorcing couple agrees on the home’s value, they subtract the outstanding mortgage to determine their equity.

The division of home equity in a divorce can follow one of three main options:

Option 1: Selling the house and dividing the profits

The most straightforward way to split the equity of the home is to sell it. After settling the mortgage, taxes, and sale-related costs, the remaining money is divided between the former couple.

For couples facing high-asset property division, “It’s exceedingly important to align yourselves in understanding the complexities of selling a home while going through a divorce, and finding expert communicators in your community to advocate for you. Selling a house under good circumstances is stressful enough as is, so it only becomes more-so when you add in all the emotions associated with a divorce,” says Dan Andrews, a Colorado Springs realtor.

Option 2: One spouse keeps the house

For one spouse to become the sole owner, refinancing the mortgage is the optimal route. Refinancing achieves three goals:

  1. Removes the other spouse from the mortgage, eliminating joint ownership.
  2. Pays off any outstanding mortgage debt by replacing it with a new loan.
  3. Generates funds to buy out the other spouse’s equity share.

Following a refinancing, the divorced owner typically needs to qualify for the mortgage based on a single income, which can be challenging if the original mortgage was based on dual incomes.

Option 3: Both retain ownership of the house

Sometimes, circumstances aren’t suitable for selling the house immediately. Perhaps the couple owes more on the mortgage than the home is worth, or they cannot afford separate residences. Alternatively, one spouse may move out but continue to contribute to the mortgage while the children are in school. However, since Courts are looking to achieve the financial separation that comes with a divorce, this option is far more likely through a settlement than in Court.

How Much Equity Can You Get in the Property Division?

Though equitable distribution plays a big role in how assets are divided, let’s break down how much of the house’s value you might end up with if the split is truly 50/50 in your case scenario. Here’s a simple example:

A couple owes $50,000 on a house appraised at $600,000. That means their equity is $550,000 (the $600,000 home value minus the $50,000 owed). If they split the equity equally, they each have $275,000 in equity. The person who keeps the home would need a $325,000 mortgage:

  • $50,000 to take over the outstanding loan balance
  • Plus $275,000 to buy out the ex’s half of the equity

So in this example, the ex who leaves the house gets $275,000, has no mortgage and no stake in the house’s future equity; and the ex who keeps the house has $275,000 in equity, a $325,000 mortgage and the future value of the house.

Contact a Colorado Divorce Attorney

Ultimately, navigating property division during divorce requires careful consideration of individual circumstances and legal expertise. Seeking the counsel of a qualified divorce and property division attorney early in the process can help protect one’s rights and interests.

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