Is property bought during divorce or separation considered community property?
By WomansDivorce | Answers by Brette Sember, J.D.
Since many months can pass while a couple is separated and waiting for their divorce to be finalized, it's not unusual for one spouse to buy property during this time. But how will this property be handled during the divorce? Will it be considered marital property which will be divided? If you are considering buying property during your separation or while your divorce is pending, it's crucial to understand the legal implications involved.
If you purchase major assets before your divorce is finalized, the property may be subject to division during divorce proceedings and your spouse may have a claim to a portion of the property. Whether the property will be considered a marital asset to be divided depends on the specific laws of the state where you reside.
In community property states, all assets and debts acquired during the marriage are generally considered marital property. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, if marital funds are used to buy property while the couple is separated, the asset may be considered community property and subject to division during divorce. However, property purchased during a separation with separate funds (such as those from separate income, an inheritance or a gift) is generally considered separate property. Your spouse will most likely need to sign a quitclaim deed relinquishing his rights to the property to maintain the separate property status.
The rest of the states usually view property acquired after a separation as separate property. In general, the longer the period of separation and the more separate each spouse's financial affairs are, the more likely it is that any property acquired during separation will be considered separate property.
The date of separation can have significant implications for the division of property when a couple divorces. In most states, the date of separation is when the couple no longer intends to continue living together or remain married. Determining the date of separation varies by state law, but may be signified by a legal separation agreement or the filing of divorce papers. It may involve other factors, such as when the spouses began living separately or began communicating their intent to separate by moving into a separate bedroom.
Overall, the date of separation is an important factor in the division of marital assets because it helps to establish what property is subject to division during a divorce and what property belongs solely to each spouse.
To ensure that property bought during divorce or a separation won't be subject to division during a divorce, you may need to take certain steps depending on the laws of your state. Here are a few options to consider:
Keep in mind that laws regarding property division during a divorce can be complex and vary by state. You should consult with a lawyer who specializes in family law to help you navigate the process and protect your interests.
Below are common questions that often come up regarding property rights during a separation or pending divorce, and our legal advisor points out some things to consider if you find yourself in this situation.
Pat's Question: My divorce is not final. Can I enter into legal contract to buy another house while I am considered still married?
Brette's Answer: You can, but whether it will complicate your divorce is another question. You should meet with a divorce attorney in your area to be sure to handle this in a way that protects it from the divorce.
Felice's Question: I live in a community property state. We are not divorced yet, but have mediation scheduled for the end of this month. I have moved out and am living in a home that my family owns. My husband just closed on a home without my signing any documents. I have a copy of the loan agreement with his name as the borrower. How can this happen? Since we are still married, what type of recourse do I have?
Brette's Answer: Either spouse can buy a home during marriage; just like either one of you can go out and buy a car or a pair of socks. The question is going to be where the funds for the purchase came from. If they are marital assets, the amount of those funds will be accounted for as part of your divorce. To make up for the assets he has used to buy the home, you could receive other marital assets. You need to discuss your entire financial situation with the mediator. Usually, mediators advise their clients to put a hold on making any big financial moves during mediation.
Kim's Question: My soon to be ex-husband has already bought a home before our final settlement is signed. We sold our home and the money earned on the sale is in an escrow account until our divorce is finalized. How he managed to buy this home is unknown to me. Would this be considered a marital asset?
Brette's Answer: Assets are generally divided as of the date of separation. If marital funds were used to make the down payment though, this would be taken into consideration in the property distribution.
Regina's Question: I was awarded a personal injury settlement and want to use some of the money buy a house that will give me the mobility that I require. Do I have to share that property with my husband? When I divorce, is he entitled to this property?
Brette's Answer: You need to talk to an attorney in your area. In general, if separate property isn't co-mingled, it won't be considered a marital asset. In other words, if you purchase the house in your name, using only your own separate money, and he never contributes to or participates in the upkeep or lives there, it will likely remain your separate property, but you should talk to a lawyer so you can dot all the I's and cross all the T's.
Traci's Question: I have been separated from my husband since last July, and we have not yet filed for the divorce. I would like to purchase property, but am concerned that he would be entitled to any real estate that I would acquire before the divorce is final. Please advise...
Brette's Answer: Property is generally divided as of the date a couple separates. However, if you will be using marital funds to purchase a home, those funds are part of the total marital assets that will be divided in your divorce. Consulting with a lawyer will help you understand how these assets would be divided.
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