A major issue in most of my divorce cases is the value of the family residence. Yes, even in this market there may be equity. The value is affected by the condition of the home, which is often a source of litigation. Usually, there is no home inspection to provide an objective view of the homes defects.
What family law lawyers call the "In Spouse" is the person most likely to end up with the residence; that party generally wants it cheap. The "Out Spouse" wants it dear - often he [or she] is getting a business or other assets offsetting the equity in the home. Sometimes the In Spouse simply has greater resources [separate property funds or family help, for example], and can afford to keep the house. The Out Spouse is often not in the running financially, so he [or she] wants a high value or the property sold for the maximum.
As you can expect, when asserting a value, to the In Spouse the house is a shack; to the former mate, it is a pristine palace. We see these arguments passed back and forth going back to the beginning of real estate. Usually, they are just arguments.
In San Diego, most of our judges want a neutral real estate appraiser, and we choose from a short list of the usual suspects to go to the home and ignore what each party says is good or bad about the house. The real estate appraiser we choose should have a lot of experience in divorce cases, so often does not put much stock in the claims of either side.
This is where a home inspection can help. There was a recent New York Times article on this subject.
In a recent case in my office, the parties disputed the impact of roof leaks and mold on the value of the family home. During the parties' separation, In Spouse had spent $40,000 of community property repairing the damaged drywall and cabinetry, fixing a leaking upstairs deck and removing the mold.
The Out Spouse acknowledged a minor leak. The dispute was over whether the house would have appraised for $40,000 less had the work not been done - the In Spouse didn't want to be charged with receipt of the money in the division of property, claiming it had gone into the asset that was later divided at its fair market value. To the In Spouse, it shouldn't matter whether the money was in the bank or in the house, it was divided either way. The Out Spouse said it was upgraded or the work was done by the In Spouse's friends and the cost of their work should be ignored. The appraisal was of the repaired home, and the appraiser wasn't asked to give an opinion of value had the work not been completed.
Unfortunately, the work was done without the knowledge and consent of the Out Spouse, who disputed the need for the work as well as the cost. I won't tell you how the case came out, but you can see the problem. I came into the house long after the work was done and the appraisal obtained.
In addition to these problems, if my client is the In Spouse I must be sure that he or she knows that keeping the house is a business decision, although the client may want it for purely emotional reasons. Unless he or she knows the true condition of the home, and the cost to repair it, the client may be making a huge mistake.
