When a couple is legally separated, many wonder what becomes of any real estate that they might have either acquired together in the marriage, or bought separately. This article will dive into the differences between legal separation and divorce, and how real estate division is handled in various states.
Legal Separation vs. Divorce
The first question that needs to be asked is how legal separation differs from divorce.
When a couple is legally separated, they live separate lives, but have not yet ended their marriage in a formal manner. In such a case, a formal judgment is issued in a court which determines how the couple’s assets are managed during their separation. These assets include property. Similar to a divorce settlement, child custody is also decided. A person that is legally separated may not remarry until a divorce has occurred, thus it is often used as a precursor to divorce.
How Real Estate Division Is Handled
Once a couple decides to become legally separated, how exactly is the issue of property handled? The court will divide the property depending on the following contributing factors:
Can the two spouses reach agreement on how property is to be divided?
Often this is decided by the two parties without the need for a court. This should be written down in their marital separation agreement. However, it must be remembered that because a divorce has not happened, any additional property gained by either spouse must be factored into the equation.
The state in which the legal separation is being executed.
Couples married in community property states will see their marital acquisitions evenly divided by the court. This is often the most obvious outcome.
Couples married in common law states fall under different rules. Here the court must take certain factors into account while deciding on property distribution. The court will follow the principal of “equitable distribution” allowing everything to be split in a fair manner.
There are two forms of property that need to be defined in this regard. First, property that was acquired during the course of the marriage. This is known as marital property. Secondly, property that was acquired before the marriage, or received either by inheritance or gift. This is known as separate property. Sometimes property considered to be marital can become separate, but only if the two parties agree that such a property only belongs to one of them and the court approves.
Legal Separation vs. Divorce Real Estate Distribution
Legal separation and divorce differ when it comes to the distribution of property. This is because the couple remained married while separated. As discussed earlier, any property acquired by either party, therefore, becomes marital in nature.
If new property is acquired by either party, the legal separation judgment can be changed at any point. A court is also able to change any marital property distribution, if divorce proceedings are undertaken in the future.
In a divorce, once the proceedings are finalized, the two party’s real estate dealings are over.
State-by-State Differences
As briefly discussed earlier, property distribution can differ from state to state depending on whether the state is a common property or equitable distribution state.
Common Property States
These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
In these states, all marital property is equally owned between spouses and therefore equally split during a separation or divorce.
In California, for example, 2 people become 1 community when married so that all debt, earnings and property equally belongs to both. Even if a couple decides on a specific division, the court must legally sign off on it for it to be honored. No matter where a couple has lived throughout their marriage, even in an equitable distribution state, their entire history of earnings, properties, etc will be treated as community property.
Equitable Distribution States
In the rest of the country, property at the time of separation is divided differently using “equitable distribution”. This does not necessarily mean a 50/50 split. Many factors are considered including the length of the marriage, age, health, present and future income, living standards during the marriage as well as numerous other considerations.
See Ohio law 3105.171 for an example, which dictates the distribution of property during legal separation. They will split the property based on what the court finds as equal, taking many factors into consideration.
Real Estate Deeds Distributed In Legal Separation
Once parties are legally separated and property has been distributed, a deed should be prepared for all real estate properties. This is done so that the various properties can be transferred into the name of respective owners, as decreed by the separation document. Property sales must be co-signed by the relevant spouse, which can be done using a bargain and sale deed or a quitclaim deed.
When using a bargain and sale deed, the grantor is guaranteed to give the grantee the title, but not free of encumbrances. With a quitclaim deed, a title is given with no warranties whatsoever.
When it comes to real estate distribution due to legal separation, it is important to take into account specific state laws in terms of common property states and equal distribution states. Legal separation is treated in the same manner as divorce, but not as permanent. It is seen as a way to try out divorce and dividing the lives of two people, before finalizing it.
