How to Buy a House While Getting Divorced

You can buy a house while getting divorced, but before you do, you should ask yourself whether it's a good idea. There are risks and complications involved in purchasing a home before your divorce is finalized, and though you can't eliminate them if you make the purchase before the final decree, you can minimize them by following certain best practices.

The Risks of Buying a House While Getting Divorced

If you purchase a home while you are in the process of getting divorced, there is a substantial risk that your spouse will claim partial ownership. Typically, assets purchased during a marriage are considered community property or marital property owned jointly by the spouses. And if you use marital funds (money from a joint account or funds that were acquired during the marriage) to purchase property, you may inadvertently turn the home into an asset that your spouse has rights to.

In addition, there is a risk that you will be unable to afford the home after divorce. The cost of divorce is one of the most significant financial strains a person encounters, whether you were the primary breadwinner or a stay-at-home parent. It's a good idea to wait and see how your new financial situation impacts your budget before committing to such a large purchase.

Finally, there is a risk that your new home will negatively impact you during the proceedings. A home is a large financial asset. Your ownership of a new home could reduce the percentage of other assets that you are awarded as well.

The impact of purchasing a home during this time is a complicated issue that depends on the laws of your state. It also depends on your specific situation. For example, a prenuptial agreement or postmarital agreement can impact the analysis.

Best Practices for Buying a House While Getting Divorced

If, after weighing the decision carefully, you still want to buy a house before your divorce is finalized, you should take steps to make it less likely that your spouse can claim partial ownership of the new home. Here are some best practices to follow:

1. Make sure all documentation is only in your name and signed by you alone. This includes pre-sale documents such as the contract with your realtor, purchase offers, the sale contract, and any mortgage you take out. This also includes all closing documents, such as settlement statements, the bill of sale, tax documents, and the deed.
2. Use separate funds to pay for all home-related costs including down payments and inspections. If you do not have a separate bank account or credit cards from your spouse, you should create them before starting the home purchase process.
3. If possible, you should also request that your spouse sign a legal property agreement clarifying that the new house will be owned exclusively by you and that your spouse will have no ownership interest in it. If your spouse refuses to sign the agreement, it's a sign they will try to claim some ownership interest in the new home and you should wait to make the purchase until after the divorce is finalized.

The bottom line is that there is risk involved in buying a home before you are divorced. Keep these potential issues in mind before purchasing your home while undergoing such proceedings.