In California. If a couple getting a divorce owns a condominium (as community property), but the current market does not support its sale and neither party can refinance or is willing to relinquish their interest in it, how is each parties' ownership interest resolved upon dissolution of the marriage? Will the court assign the interest to one party and then execute a judgment or a lien upon it in the interest of the other party in order to equitably distribute potential future equity gains derriving from refinance or sales proceeds?
The law in CA. involving community property is that the property's value is to be determined as close to the date of trial as possible. For example: You both own the condo, now valued at $300,000.00, due to declining real estate values. However, your existing mortgage balance is $ 400,000.00. So your are what is called "upside down" in your equity, meaning that currently, there is no equity. If neither party will agree to vacate the property, then the property will be ordered to be sold. Your responsibility will be just to list it for sale and co-operate with the listing realtor. One of the parties could "rent" the condo from the communal estate while it is on the market for fair market rental value. The other party should file for Watts charges to offset the first party's sole use of community property. But since your "upside down", you will not get a regular sale, enough to cover the balance of the existing mortgage. Consider asking the lender for a short sale. Bottom line, you both will be liable for the negative balance of the existing mortgage. The court will not/should not attempt to figure out what the value may be in the future. The value is set as close as possible to the trial date and/or date of dissolution. Or one just live there for free till foreclosure. It's happening all over.
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