The Bay Area real estate market is very tight. Property here is notoriously expensive and very difficult to find. A couple might search for months or years to find the right second home or vacation getaway in the area. Even after locating a property, it’s still possible to spend tens – or even hundreds – of thousands of dollars remodeling and refurbishing it to make it your own.
So, what happens to all your hard work in the event of a divorce? How are second homes and vacation properties treated during property division negotiations? What are the options when it comes to dividing up this expensive real estate?
A sale might be in the works
If neither of you wants to hold on to a vacation property or second home following the divorce, then you could sell the property. Under California’s community property laws, property purchased during marriage with marital funds is part of the community estate and will be split 50/50 upon divorce.
If real estate that you bought while you were married is on the proverbial chopping block, it can be sold and the proceeds divided.
Independently split things down the middle
California’s community property laws exist to guide judges who are making settlement decisions. They don’t mean that you cannot make your own agreements on the terms of your own property division agreement. If, for example, you – as a couple – own two homes, then each spouse could agree to simply take one home in the divorce. This is a “no muss, no fuss” way to handle property settlement.
Consider a buyout
If you really want to keep a particular property, be it a vacation home, a rental property or even the marital home, you have the option to propose a “buy out” of your spouse’s interest. Buying out your spouse may mean that a larger percentage of your post-divorce assets will be invested in a vacation or other residence.
It is crucial that, before making a final decision, you seek financial advice to determine whether keeping the house is a smart financial move even if, emotionally, it feels too important to let go of.