The process of ending a marriage is emotionally distressing and almost always involves one or both spouses losing the marital home. While the turbulent time of navigating a divorce may not seem like the right time to make a huge decision like buying a new home, a surprising number of divorcing spouses seek to move forward and establish their own independence by buying a house.
California’s community property laws compel divorcing spouses to divide their marital assets 50/50 during a divorce. While it’s definitely possible to buy a new home during the divorce process, you must first understand the critical importance of the timing of your purchase and how it relates to the state’s community property laws.
Community Property vs Separate Property in California Divorces
Before making any big financial decisions during a divorce, it’s important to be clear on how the state determines what is separate property and what is community property. Separate property includes any assets or property belonging to one spouse before the marriage or inherited or gifted to them during the marriage, while community property includes any assets and debts accumulated by either individual or both spouses together during the marriage. Sometimes separate assets become community assets when the other spouse is given access to a separate account during the marriage or invests significant time and/or money into the other spouse’s property during the marriage. While purchases made after separating are not considered community property, a spouse could claim it as such depending on where the funds to make the purchase came from.
Untangling separate property from community property often becomes challenging as there are many ways that a spouse can claim an interest in property belonging to the other.
Avoiding Extraordinary Expenditures During a Divorce
While it’s possible to purchase a house during the divorce process in California, it’s important to consult with your attorney to ensure you don’t give the appearance of attempting to dispose of assets before equal distribution through extraordinary expenditures. During a California divorce, each spouse is placed under an automatic temporary restraining order (ATRO) which prevents them from making extraordinary expenditures without notifying the other party at least five days before the purchase. An ATRO also prohibits the selling or transferring of property during the divorce process. If buying your new home requires selling your existing home or liquidating other assets, it could negatively impact your divorce agreement and in some cases could result in contempt of court charges.
Will the Courts Consider Your New Home Community Property?
If you wish to purchase a new home during your divorce, you probably don’t plan on sharing it with your soon-to-be-ex-spouse, immediately selling it in order to split the profit, or having to buy out your spouse’s half. In order to ensure that your new home is your own separate property and not subject to division, you must make the purchase after you’ve separated from your spouse. However, there is more to it than that. You must also ensure that the funds you use to buy your new home come only from your own separate property and not from any joint assets.
A lawyer can help you ensure that your funding comes strictly from separate sources and not from community property. Often, a San Francisco property division attorney will recommend obtaining a signed document from the spouse acknowledging that they have no claim on your new home to avoid any future claim attempts.
Other Important Considerations When Buying a House During Divorce
It’s important to give careful consideration before making a large purchase during an emotionally turbulent time. Divorce is no time for impulse buying. Be sure you’ve carefully considered the following before making the leap:
- Will your post-divorce budget allow you to comfortably pay the mortgage?
- Will owning a significant asset impact your spousal support amount?
- Will adding the burden of a big move and potential repairs or redecorating be too much to take on emotionally during the divorce process?
- Will the home’s location work well for sharing custody of your children?
If you’ve carefully considered all aspects of new home ownership and followed your attorney’s advice on ensuring your new house is your separate property, there’s no reason you shouldn’t move forward on your new start.