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Divorce - Who Gets to Keep the House?


In Colorado, before a court will divide property subject to a dissolution of marriage or legal separation, it must first determine the assets and debts that make up the “marital estate.” The marital estate is comprised of any asset or debt accrued between the date of marriage and the date of divorce or legal separation. Assets are real estate (such as the family home, vacation homes, rental properties, timeshares, etc.) and personal property (vehicles, cash, bank accounts, household items and goods, personal clothing and items, retirement accounts, stocks/mutual funds/ securities, etc.). Debts are mortgages, liens, loans, and unsecured debt.

Ownership affords total use and enjoyment of one’s property but also carries the obligation to pay for any of its debts. Possession of a home during a divorce or legal separation will not be covered here, but it is also a germane part of the process.

Colorado Revised Statutes §14-10-113(3) creates a presumption that all property acquired during the marriage is marital property unless the property in question falls within the listed exceptions of §14–10–113(2), C.R.S. These exceptions are:

(a) Property acquired by gift, bequest, devise, or descent;

(b) Property acquired in exchange for property acquired prior to the marriage or in
exchange for property acquired by gift, bequest, devise, or descent;

(c) Property acquired by a spouse after a decree of legal separation; and

(d) Property excluded by valid agreement of the parties.

Property owned by one party in a marriage that falls under any of the above exceptions may be considered the separate property of that party and, therefore, not part of the marital estate to be divided.

Once the court identifies what assets and debts are marital, it can consider how they will be divided. Generally, each party to a marriage is entitled to one-half of the value of marital assets and obligated to pay one-half of the marital debt.

Regarding real property, any real estate or parcel of land that was purchased during the marriage will likely be characterized as a marital asset unless there is clear and convincing evidence of any of the four exceptions above. The property will be characterized as a marital asset regardless of whether both parties are listed on the deed and mortgage.

The amount of money the owner of real property can receive after selling the property and paying off any associated debts (mortgages, liens, etc.) is the “equity” of the property. Each party to a marriage is typically entitled to one-half of the equity of their property. This one-half of the equity is one’s “interest” in the property.

In a divorce or legal separation, the parties can agree to sell the property and split the proceeds after any debts are paid so that neither party will be an owner of the property, or one party can choose to own the property in whole by providing money for the total sum of the other party’s interest in the home to that party. If a party has the present funds to pay off the other party’s interest, they need not seek a mortgage or refinance the current mortgage in their name alone. However, the courts require a guaranteed source of funding by which the other party may receive the total sum of their interest in the property, or the property will likely be ordered to be sold and the proceeds split accordingly. If the court orders the sale of the property, the parties must comply and prepare the property to be sold.

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