Real Estate & Divorce : What You Need to Know

For the vast majority of people, their most valuable asset is the family residence. What happens to the real estate owned in the event of divorce? The answer depends on what stage you are in the divorce process and how title is held.

Tenancy in Common

Tenants in common provides for multiple percentages of ownership interest and inheritance rights for the heirs of each grantee.

Joint Tenancy

Each person has a 50% ownership of that piece of property. If one person dies, the other person automatically owns 100% of the property which avoids probate.

Community Property with Right of Survivorship

Spouses hold title to marital property. When one spouse dies, the other spouse automatically owns 100% of the property which avoids probate.

A prospective client should bring a copy of the deed(s) or a preliminary title report to their first meeting with the attorney to verify ownership as well as any liens recorded against the property.

Divorce Petition Filed

Upon filing a Petition for Dissolution of Marriage, both parties are restrained from “transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community, or separate, without the written consent of the other party or an order of the court, except in the usual course of business or for the necessities of life…” (Family Code §2040)

These restrictions are often referred to as Automatic Temporary Restraining Orders (“ATROS”). While a pending divorce may prevent either spouse from selling real property, he or she still has the ability to: (1) sever a joint tenancy with a spouse or (2) terminate right of survivorship provided adequate notice is given. (Family Code §2040(b)(3))

One reason why a party may choose to sever the joint tenancy/community property with right of survivorship while the divorce is still pending is to prevent the other spouse from inheriting the entire property upon death. As a result of the divorce, a wife may desire to have her children and not her estranged husband inherit her interest in the property upon death.

Divorce Judgment Entered

Joint Tenancy/Community Property with Right of Survivorship
A divorce judgment automatically cancels or severs a joint tenancy between spouses as matter of law. Similarly, property held as community property with right of survivorship also terminates upon entry of judgment . (Probate Code §5601)

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