Dividing assets in a divorce presents challenges, especially when it involves a second home. Whether it’s a vacation home, rental property, or family cabin, the second home holds both financial and emotional value. This blog will explore how divorce settlements handle second homes and what options you can consider.
How is a second home divided in a divorce?
In Colorado, the division of a second home during a divorce follows the principle of equitable distribution. This means the court will divide property fairly, though not necessarily equally, based on factors like the property’s value and the couple’s financial situation. Colorado is not a community property state, so assets acquired during the marriage are subject to equitable distribution, and the court considers each spouse’s contributions to the property, both financial and non-financial.
It’s important to determine whether the second home qualifies as separate property or marital property. If you purchased it before the marriage, it could remain separate. However, if you bought it during the marriage, the court may consider it marital property, subject to division.
What options do you have for the second home?
After classifying the second home, you have a few options. One choice is to sell the home and split the proceeds. This option simplifies matters, though it may not feel ideal if the home holds sentimental value.
Alternatively, one spouse may buy out the other’s share. Both spouses need to agree on the home’s value, usually through a professional appraisal. The spouse keeping the property assumes responsibility for the mortgage, property taxes, and maintenance costs.
What if you can’t agree on the second home?
If you can’t reach an agreement, mediation or court intervention may become necessary. Mediation provides a neutral space for both parties to negotiate, while a court ruling offers a legally binding decision.
A court may order the second home to sell, with the proceeds divided between the spouses. If the home holds significant value or relates to one spouse’s career or lifestyle, the court may consider these factors in its ruling.
Dividing a second home can stir emotions, but understanding your options allows you to make a decision that aligns with your needs. Whether you choose to sell, buy out the other spouse, or pursue mediation, grasping the role the property plays in the settlement helps guide your decision.