Complications of Dividing Real Property in a Michigan Divorce

When it comes to getting divorced in Michigan, the process of property division can be complicated and contentious for any couple. Yet property division can become even more complex when the court has to divide real property, particularly multiple pieces of real property. For example, a couple might own a marital home, a vacation property, as well as other pieces of real estate. What do you need to know about dividing real property in Michigan during a divorce?

Understanding How Property Gets Divided in Any Michigan Divorce Case

Before we get into the specifics of the complications involved in dividing real property, it is important to understand how property division in general works in the state. Under Michigan law, property is divided according to a theory known as equitable distribution. This means that the court divides marital property-both assets and debts from the marriage-in a way that it considers to be fair or equitable to both of the spouses. It is rare for equitable distribution to result in equal distribution of marital assets and debts, although such a division may occur if it is what the court deems to be equitable under the circumstances.

It is possible for a couple that is getting divorced to negotiate a property settlement to which they both agree. With a property settlement, the parties come to an agreement themselves about how the marital assets and debts will be divided, in which case the court does not have to step in and make these decisions. Negotiating a property settlement can allow a divorce to move faster because it may result in an uncontested divorce. However, in most cases, the court will divide the marital property. The distribution of marital debts and assets can be especially confusing and complicated when there are multiple pieces of real estate, or real property. How does real property get divided in a Michigan divorce?

Separately Owned and Jointly Owned Real Property

Generally speaking, real property is treated much like any other property. To better understand, let us give you a hypothetical: A married couple is getting divorced, and they own a home, a vacation property, and an apartment in downtown Detroit that they rent out for rental income. The first step in dividing real property is determining whether it is separate or marital property. Separate property is typically any property that was acquired before the marriage, property that was gifted to or inherited by only one of the spouses during the marriage, or property that is specifically designated as separate by a prenuptial agreement. If any of the real property in question is separate property, then it does not get divided.

Any real property that is marital property, however, will be divisible. Under MCL 552.103, the court has a couple of different ways it can handle real property. It can award a piece of jointly owned real estate to one of the spouses, or it can order that the real property be sold with the proceeds distributed in a particular manner to one or both parties. So, for example, the court could award all three pieces of real property to Spouse A and could award other marital assets to Spouse B.

When Real Property is Commingled Property

It could be relatively straightforward to divide real property in a divorce if the real property could be classified clearly as separate or marital property. In most family situations, however, this is not the case. Instead, there are multiple pieces of property to which both spouses have invested some separate property. For example, the marital home might have been purchased with a down payment taken from Spouse A's savings account funds, which she earned before the marriage. Or, that rental property in Detroit could have been renovated with an inheritance that Spouse B got during the marriage.

In these kinds of situations, the real property has become "commingled," having characteristics of both separate property and marital property. In such situations, if the court can trace out the percentage of separate and marital property, it may be easiest to order the property sold so that the proceeds can be distributed accordingly. In many cases, however, it can be extremely difficult to trace out what is separate and what is marital, especially when the value of the real property could have fluctuated substantially over the years.

Seek Advice from a Divorce Lawyer in Michigan

Dividing real property can be extremely complicated in a divorce, but a Michigan divorce lawyer can assist you. Contact the Law Offices of Michael A. Robbins today to learn more about how we can help with your case.