Splitting up Rental Properties During a Divorce- Information for Southern California Landlords
If you (or your spouse) are a landlord who has assets in the form of rental properties and you are facing a divorce, you are no doubt searching for information on if or how your properties will be divided during a dissolution of your marriage. Although every situation is different, we can state some general principles that will apply, based on when the properties were acquired and whether they are self-sustaining.
- The properties were owned before the marriage and have been self-sustaining during the marriage.
- Typically, these properties would remain with their original owner and would not be subject to division during a divorce.
- The properties were owned before the marriage but community income or assets were used to sustain or renovate the properties.
- In this case, the spouse who does not own the properties would typically be entitled to some sort of reimbursement for the community assets that were used for the rental properties during the marriage. The Moore/Marsden formula is used to calculate what reimbursement is owed to the community. This formula allows the community to acquire a proportional interest in the separate property by reimbursing the community for any actual community pay down of loan principal plus apportioning to the community a pro rata share of the equity increase in the property.
- The properties were purchased during the marriage with community assets.
- In this case, the properties would typically be divided 50/50 during a dissolution.
Impact of Covid-19 Eviction moratorium on Landlords Facing Divorce
The pandemic eviction moratorium (recently declared unconstitutional by the Supreme Court) is going have a major impact on some landlords who are divorcing. Since many tenants stopped paying rent during the moratorium, countless properties that were once self-sustaining became liabilities. It’s likely that many landlords had to use community assets to pay for mortgages or repairs during this period where many stopped receiving rent payments. If this was the case, the spouse who shares the community pot of assets will likely be compensated in the dissolution order.
Do you need help protecting your rental properties or getting your share of the assets during a divorce?
Call our office today at (949) 363-5551. We specialize in helping high income clients who have complex assets that need protection during a divorce, as well as cases complicated by narcissism, bipolar disorder and other mental illnesses. John A. Bledsoe is Orange County’s premier divorce attorney and a certified family law specialist. Our firm offers a confidential initial case evaluation. to learn more.
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