Real Estate - How to Value and How to Divide

Examples of real estate: primary residence/home, rental properties, vacation homes or cabins, farms, investment properties, timeshares, or a plot of land

First: Gather the Facts

• Equity is the value of the property less all debt pledged against the property
• The value you are looking for in divorce is an “as is” or fair market value
• If you plan to sell the house, you don’t need an exact value – you will value it in the market
• Options to Value Real Estate
  • Agreement
  • Online sites, like Zillow, Redfin or Trulia
  • Comparative Market Analysis (CMA)
  • Fair market appraisal
  • Beware of bank appraisals and tax assessments

Outline All Liabilities or Debts Against the Property to Determine Equity

This includes things like primary mortgages, second mortgages, home equity lines of credit (HELOCs), or home equity loans

Understand whose name is on debts and balances owed

Investment Properties or Income Generating Complications

Investment properties and farms are much more complicated and you may need additional expertise to help determine value

Second: Understand the Law

• Equity in real estate is typically considered a marital or joint asset
• Laws vary on how non-marital/separate equity in real estate is determined and what obligations the party claiming this separate interest has to prove
• Commonly real estate owned prior to marriage or that was bought during the marriage using one spouse’s money alone for a down-payment (like with inheritance or pre-marital funds) has a non-marital element
• If you want to make a claim that you have a right to more than an equitable share of the real estate, you likely have to provide clear documentation of your right to more than half

Once the equity is calculated and categorized, the next decision is determining whether the house will be sold or one spouse will buy the other out of the equity.  

Logistics of Title on Property and House Loans (Mortgages)

1. Title on the property itself is typically easy to transfer from one party to another
2. Titling on any mortgages or debts pledged against real property can be more difficult to adjust in divorce

Emotional Considerations of Dividing Real Estate

• Emotional elements may make a legal analysis about real estate in divorce challenging
• Inherently subjective, but acknowledging their existence is important
• Real estate can also be tied to a sense of financial security
• Can pave the way for creative solutions and compromises