Wail Sarieh
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Can I Sell My House During A Divorce?

Divorce

What happens to the house in a California divorce? Can you keep the house? Stay in it? Sell it? When a marriage ends, the fate of the family home is often a central point of dispute. What are your options when you divorce in California and the future of the family home must be decided? An experienced Orange County divorce attorney can help you answer these questions and protect your personal, long-term interests.

When you seek a divorce in California, you must fully understand your legal options and alternatives. When a married couple buys a home in the state of California, it becomes their community property, and if the couple seeks to divorce, the home must be “split” 50/50. If you and your spouse can reach some agreements, these are several possibilities for dividing the family home. The easiest way is simply selling the home and splitting the proceeds, but for many divorcing couples, this is not an option. Another possibility is a buy-out, where one spouse directly purchases the other spouse’s half of the home.

SHOULD ONE SPOUSE MOVE OUT?

Does moving out of the house have any impact on the divorce or the fate of the house itself? From a legal point of view, a spouse with a community property interest in a home does not forfeit that interest simply by moving out. However, from a practical perspective, voluntarily moving from the house during a California divorce is not a good idea. Sleep on the sofa if you must. If you move out and your divorce goes to a trial, your spouse’s attorney might charge that you abandoned your family, and you will have a hard time proving otherwise.

Selling the family home while the divorce is pending will be complicated by the Standard Family Law Restraining Orders that go into effect as soon as a California divorce petition is filed and served. The automatic temporary orders restrain both spouses from “transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community, or separate,” without the other spouse’s written consent or a court order.

WHAT IS A “STIPULATION AND ORDER” TO SELL?

A stipulation is simply an agreement, so a “stipulation and order” in this context is an agreement (between divorcing spouses to sell the family home) that becomes, with the help of your divorce lawyer, a court order to sell the home. Of course, an agreement between spouses to sell their home is more than a simple “Okay, let’s do this.” To reach an agreement to sell, spouses must also consider a number of detailed, related questions such as:

  • How will the sale price be determined?
  • Will the choice of a real estate agent be mutual?
  • If the original sale price must be reduced, how will that be done?
  • Who will make sure the home is ready for potential buyers to see?
  • Will one spouse take the “lead” responsibility for the sale – or will every discussion, decision, and detail have to be approved by both?
  • Are there liens or encumbrances other than the mortgage that must be satisfied?
  • Is there an agreed dollar amount that, if offered, will result in accepting the offer?
  • Are any reimbursement claims asserted by either spouse?

Obviously, one of the leading reasons why spouses divorce is their inability to reach agreements. If both spouses can agree on all of the questions listed above, selling the home and splitting the proceeds is probably the easiest way to divide a family home. But what if no agreement can be reached? Can the house still be put up for sale while the divorce is pending? In some cases, the answer is yes.

If you want the house sold before the divorce in finalized, you must have what the court considers a good reason. If the home is at risk for foreclosure, a spouse can ask the court to order the home sold immediately. And if one spouse is at a financial disadvantage going into the divorce process, it is not unusual for that spouse to file an attorney fee request asking the court to liquidate the house to pay for such fees.

What happens more often, however – presuming that there is no pressing reason why the house must be sold immediately – is the court will order the sale of the home when the divorce is finalized. In the state of California, this is usually the fate of a home when neither spouse can buy out the other and no agreements can be reached between the spouses regarding the future the home.

HOW DOES A BUY-OUT WORK?

The courts have the discretion to order a buy-out lacking a stipulation, but this is rare and only happens in the most complicated California divorces. If the spouses agree that one spouse will buy out the other, the buy-out must follow a stipulation and order. Think of it as one spouse selling the home to the other, but without the inconvenience of listing, marketing, and showing the property.

A buy-out in a California divorce does not necessarily have to be paid in cash. It can be accomplished with other assets, other properties, or even with compromises on disputed matters like spousal support and attorney fees. How the divorcing spouses and their attorneys arrange for the payment of a buy-out is ultimately a question that the divorcing spouses will have to decide for themselves.

Once ordered by the court, the buy-out process begins with the spouses and attorneys finding an appraiser they all trust. The appraisal – provided that both spouses agree with it – establishes the fair market value of the home. The mortgage and other encumbrances are then deducted to determine the equity value. At this point, the spouses and lawyers will then typically work together to come up with a buy-out figure.

What if a couple owns a house that they’ve used as a rental property? Can that home be sold during a California divorce? The answer is usually yes. Still, a spouse must request a court order to sell the home during the divorce. You also have to consider the tax consequences of selling a home, so you’ll probably need the advice of a tax professional as well as the counsel of an experienced Orange County divorce attorney and the services of a good real estate agent.

Wail Sarieh
By Wail Sarieh