Splitting the House in a Colorado Divorce: Sell, Buy Out, or Co-Own

Three Ways to Divide a House

Colorado law has no rule that automatically gives the house to one spouse. Divorcing spouses have three options:

• Sell the house and divide the proceeds. This is the usual answer when neither spouse wants to stay, when neither can afford to keep it alone, or when the parties cannot agree on ownership. The net proceeds after the mortgage payoff and sale costs are divided as marital property.
• One spouse buys out the other. One spouse keeps the house and pays the other for their share of the equity, by cash, by an offset against other assets, or by a promissory note. The spouse keeping the house usually must refinance to remove the other from the mortgage.
• Co-own the house for a period. In an amicable divorce the spouses can keep joint ownership, for example until the youngest child finishes school or by renting the house out. Co-ownership needs a written agreement covering who pays what, who decides on repairs, and when the house will be sold.

Each option has a timing problem on the loan. The mortgage after a Colorado divorce stays with whoever signed it until the loan is refinanced or paid off, no matter what the decree says.

When Spouses Cannot Agree

If you cannot agree on any of the three options, the court decides. Colorado’s statute requires the judge to weigh these factors when dividing marital property:³

• Each spouse’s contribution to acquiring the marital property, including contributions as a homemaker.
• The value of the separate property set apart to each spouse.
• Each spouse’s economic circumstances when the division takes effect. That includes whether the family home, or the right to live in it for a while, should go to the parent the children mostly live with.
• Any increase or decrease in the value of each spouse’s separate property during the marriage, and any depletion of separate property for marital purposes.

The court can also consider any other relevant factor. Who moved out does not by itself change the ownership analysis, and your rights if you leave the marital home explains what leaving does and does not affect.

Splitting the House When Children Are Involved

The statute names the family home directly. The court may award the home, or the right to live in it for a reasonable period, to the parent the children mostly live with. The reason is stability for the children, and it is a factor the judge weighs, not a rule, so it still has to be affordable.

When parents share time equally, the house question is harder, and the court looks at the overall picture. Whether the house was bought before or after the marriage, how the down payment was funded, and each spouse’s ability to carry the mortgage all matter. If one spouse paid the down payment from separate property, such as an inheritance, that contribution and any tracing records become central.

Whether to keep the house is as much a cash-flow question as a legal one, and the two have to be answered together. Johnson Law Group offers a no-pressure consultation to run the numbers with you, so schedule a consultation before you commit to a position.

Separate Property, Marital Property, and the House

Dividing assets in a Colorado divorce starts with deciding whether each asset is separate or marital. Marital versus separate property in Colorado is defined by statute. Separate property includes what a spouse owned before the marriage and what a spouse received by gift or inheritance, and the rest acquired during the marriage is marital.

Two rules catch homeowners. First, the increase in value of separate property during the marriage is marital. If one spouse bought the house before the marriage and it appreciated while the couple lived there, the appreciation is marital property even though the house itself is not.⁴

Second, adding your spouse to the deed is a gift between spouses. Gifts between spouses are presumed marital unless the giving spouse proves otherwise by clear and convincing evidence.⁵ These rules apply when spouses divorce or legally separate. If you bought a home with a partner you are not married to, how you hold title depends on the deed. Learn more about property rights for unmarried couples who own a home.

Valuing and Dividing the Marital Home

Once the property is sorted, each marital asset gets a value. The statute fixes that value as of the date of the decree or the property hearing, whichever comes first.⁶ For a house that means a professional appraisal, and with the value and the mortgage balance in hand the three options can be priced.

A buyout is implemented through the decree and a deed, and the refinance is usually a deadline in the order. A sale is implemented through a listing agreement both spouses sign, with the proceeds divided per the decree. Co-ownership is implemented through a written agreement that the decree incorporates, so it can be enforced later.

The attorneys at Johnson Law Group help families decide the house question with the numbers in front of them and will give you a clear read on your options. Schedule a free consultation through our Colorado offices, and we will serve as your North Star from here.