It is an inevitable part of divorce that two people will require separate residences. Even when there are sufficient assets, often people aren’t sure if they want to rent or purchase a home when there is uncertainty as to how the property will be divided. If you rent a home or apartment, you have the benefit of time to plan how your final property division will allow you to purchase a new home. But it is difficult for people to move to an apartment and then, within a year, make a second move once they decide to purchase a home. So, it’s natural to ask the question, “Can I buy a new home for myself when I move out even if it is before or during the divorce?”
Whether you live in an equitable division state or a community property state, you make a grave error moving ahead on purchasing a home before filing for divorce. If the goal is to purchase that home as a single person, one cannot guarantee that outcome without incorporating it into the divorce agreement. Even when the parties have agreed that one of them will be purchasing a home, the closing almost always takes place after the final hearing to ensure that the buyer is truly purchasing as a single person.
If you have found the home of your dreams and live in a community property state, with adequate precautions, you might be able to purchase a home before the final divorce hearing with the assistance of an experienced West Bend divorce attorney and your spouse’s cooperation. In a community property state, one option could be to have the couple sign a marital property agreement categorizing any real estate purchased during your marriage as your sole or separate property. But there are pitfalls. Even if perfectly legal, some mortgage lenders will not agree to a closing prior to the final divorce hearing.
Most states generally award gifted or inherited property to the owner without dividing it. Therefore, it could be tempting to purchase a home with inherited funds before filing for divorce. But again, that decision is fraught with peril. Because you are still married, some lenders or title companies might draft the deed listing both parties as owners. In many states, this can also be seen as a transfer of gifted property to the other spouse, converting it to marital property. That conversion has defeated many a claim to exempt the inheritance from division.
If you want to avoid two full moves in a short amount of time, there are several better options. First you could rent with the option to purchase after the divorce is done. Second, some people will temporarily move in with friends or family to avoid the restriction of a 12-month lease. Third, people with enough space often separate into separate areas of the home without formally moving out. Fourth, if the parties have good communication and want to leave their options open while they mediate a settlement, they create a nesting arrangement where each parent stays in the home only when they have the children. When they do not, they temporarily stay elsewhere. The parents move in and out but the children stay in the “nest” which minimizes the cost of a full, second residence while they work out who will retain the home or if it will be sold.
Before filing for divorce, it is wise to investigate housing options including price, size and locations. But even if you have an inheritance, buying a home too soon is not worth the risk of later losing a portion of that home in the subsequent divorce.