Can I Buy a New House Before My Divorce is Final?

A frequent question people going through divorces have – especially when the divorce process is taking longer than expected – is whether they can purchase a new house before the divorce itself is finalized. The desire to purchase a new home is understandable, given that living arrangements nearly always change during a divorce, and many divorcing spouses seek to buy a new home that can house their children on at least a partial custody basis, or simply want to live in a similar place as they did during the marriage. Buying a new house is also the fresh start to a new chapter.

Purchasing a new home while you are getting divorced but before the divorce is final is not prohibited by California law, but there are a number of issues you will want to keep in mind and discuss with your attorney as necessary.

Automatic Temporary Restraining Orders

In every California divorce, both parties are subject to the “automatic temporary restraining orders” or “ATROs” listed on the Summons that is served with the petition for divorce. These ATROs do prohibit, among other things, selling or transferring property without the consent of the other party, “except in the usual course of business or for the necessities of life.” Thus, if you are selling one house to purchase another house, this order may come into play.

Furthermore, the ATROs require “each party to notify the other party of proposed extraordinary expenditures at least five business days before incurring those expenditures and to account to the court for all extraordinary expenditures made after service of the summons on that party.” You will want to discuss with an attorney whether this provision applies to your purchase of a new home and how best to go about this notification process without causing unnecessary issues and delays in your divorce proceeding.

Who Will Own the New House?

This may seem like an obvious question – you might be saying “me, of course!” But not so fast. Understand that when you are in the process of a divorce in California, you need to account for all of your property to the other property, and the judgment in your divorce will need to clearly distribute the collective property owned by the divorcing couple to each spouse.

Presumably if you’ve moved along in the divorce process, you should understand that community property (the property earned during the marriage or acquired with funds earned during the marriage, absent a premarital or post marital agreement to the contrary) is split 50/50 between the parties while separate property goes to the owner of that property. Mixed community and separate adds a layer of complexity we won’t address here.

Which raises the question of whether the funds used to purchase your new home (including down payments, inspections, and other pre-closing costs) will be considered community or separate property, and that directly leads to the question of whether that new home will be considered community property subject to division by the court. Additionally, a court might look at whether both spouses’ credit was reviewed in approving the mortgage loan to determine the ownership of the new house. What assets and liabilities is the lender looking to. Even if the home is indeed separate property, that doesn’t mean your spouse and his or her lawyer won’t create a lot of headaches for you in arguing whether the home is community property or not.

This does not mean you cannot buy a new home during a divorce. But what it does mean is that you will want to work with your attorney to make it very clear whether the source of funds used to purchase the home is separate or community property and thus how the new home should be treated in the final divorce judgment. Ideally, this will involve a written agreement with the other spouse on the property characterization of the house, as well as a quitclaim or interspousal transfer deed executed by the other spouse, so that he or she does not come back to argue that the house is actually half-owned by them.

Other Issues Raised by the Purchase of a New Home During a Divorce

Although the question of who owns the new home is likely the biggest question you will face when purchasing a new home before a divorce is final, other issues may arise as well. If you are either potentially going to be paying or receiving spousal support, the fact that you own a new, significant asset may well factor into how that spousal support number is reached. You also should ensure that your budget will comfortably support the new home payment taking into account potential income changes or support modifications.

Additionally, the emotional factors that play into a divorce should not be underestimated when it comes to getting both parties to come to the table to sign a settlement agreement and avoid an expensive trial. If one spouse goes out and buys the dream home that the other spouse had always wanted before the final agreement is signed, that other spouse may well feel a level of anger and resentment that keeps them from signing a final agreement. In some sense, this might seem irrational, but it happens frequently enough in family law proceedings such that a person considering purchasing a home prior to the divorce should think this potential reality through before rushing into a new home purchase.

Guidance on Your California Family Law Questions From a Westlake Village Family Law Attorney

If you would like to learn more about how our office can provide guidance on any California family law issues you are facing in Ventura County or Los Angeles County, contact the Zonder Family Law Group office today at (805) 777-7740 or (818) 877-0001, or schedule your strategy session using easy-to-use online form here.