Getting Divorced When Buying a Home

The time to think about getting divorced and buying a home is before the wedding.

You might find it astonishing to know that divorce in America peaked when Ronald Reagan was president during the 1980s. That’s when all of the so-called insane asylums (which is probably not a PC word) and mental institutions were closed. Parallels or just coincidinky? Today, it’s odd to run across a younger married couple in Sacramento because many millennials say WTF, why? But for those who are married and now contemplating a divorce, if you’re getting divorced when buying a home, listen up, because California, in case you don’t know, is a community property state. It means your soon-to-be ex can stop you from buying a home in Sacramento or even from selling a home.

Oh, you might say, but I bought my home way before I got married, so now that I’m getting divorced and buying a home, I can sell my existing home without any problem and can certainly buy another home. The answer to that wild presumption is no, you probably cannot. For starters, a spouse can gain an equitable interest in a sole and separate property acquired before marriage after getting married. Especially if that spouse resides in the home. So, that’s one issue. The problem with getting divorced and buying a home is that you are still married, even if separated, and a title company will not insure that property without a quitclaim deed of sorts.

This means you may need an interspousal transfer deed, with the spouse’s signature notarized, releasing any interest that spouse may have or acquire in said new property, providing your divorce is not yet final. If you’re getting a mortgage to buy that new home, your lender will require title insurance. And you can’t get title insurance without the interspousal transfer deed. It’s a Catch 22. Even if you are paying cash and waiving a title policy, you would still want that interspousal transfer deed signed and recorded because it could place a cloud on title without it.

It’s a little bit easier if you’re getting divorced and selling a home because this typically involves money. Money can be divided and disbursed easier than letting go of resentment. It’s the resentment and anger that often prevents a spouse from obtaining an interspousal transfer deed when buying a home, but selling a home is a way to get rid of that ex-partner and still collect money. So, it’s different. When I’ve worked with divorcing couples who could not agree on anything except to sell the home and never lay eyes on each other again, we’ve set up an account at the lawyer’s office and that’s where the proceeds of sale are disbursed. They can fight about it there later.

Bottom line, if you’re getting divorced and buying a home and your spouse refuses to sign an interspousal transfer deed, then you’ll have to find a way to work it out without killing each other or you’re hosed. Sometimes, a bifurcation can be the answer, which is a way of legally restoring your status to that of a single person, providing six months has passed since your soon-to-be ex was served with divorce papers. In any case, I am not a lawyer and you cannot rely on anything I have to say about the law because I am not authorized to speak about legal issues while licensed as a Sacramento Realtor. This information is just to get the ball rolling for you.