Selling a House During Divorce in California–How-to Guide

Going through a divorce is never easy, and dealing with the family home can add another layer of complexity. In California, where property division is governed by community property laws, deciding what to do with the house can be especially challenging. 

This guide provides a comprehensive overview of selling a house during a divorce in California, outlining your options, the legal considerations, and the steps involved in the process. Whether you’re looking to sell before, during, or after the divorce is finalized, this guide offers valuable insights to help you navigate this difficult situation and make informed decisions that protect your interests.

Key Takeaways 

Can I Sell My House During a Divorce?

If your home is a sticking point in a divorce, it may help to know you have options. For example, selling before the end of your divorce is the best way to resolve the issue and preserve tax benefits before the divorce heats up. From our extensive experience of 20+ years, homes sold during the early stages of divorce tend to achieve better market prices and smoother transactions.

Selling the house in a pending divorce situation is another option, but streamlining the process is advised, and a real estate investor can help you with that. Data shows that homes sold to investors in such situations close 30% faster than traditional sales.

Finally, if remaining in your home until your children move out is a priority, one of you can buy the other out – or you can continue owning the home together in the interim. According to our experience, co-ownership agreements can effectively maintain stability for the children while ensuring both parties’ interests are protected.

Why Selling Fast is Often the Best Option

In a divorce situation, a quick sale of the marital home can offer significant advantages:

• Avoid Prolonged Disputes: A drawn-out sale process can become a major source of conflict and stress during an already difficult time. Selling quickly can help you and your spouse move forward with your lives.
• Preserve Market Value: The longer a house sits on the market, the greater the risk of its value declining, especially in a volatile market. A quick sale can help you secure the best possible price.
• Reduce Financial Strain: Maintaining two households during a divorce can be financially draining. Selling the house quickly can free up funds to cover legal fees, new living expenses, and other costs.
• Minimize Emotional Toll: The marital home is often loaded with emotional significance. A quick sale can help you avoid prolonged attachment and move on with less emotional baggage.

If you’re looking for the fastest and most efficient way to sell your house during a divorce, consider selling to a real estate investor, like SoCal Home Buyers. We purchase properties as-is, eliminating the need for repairs and staging. We can also help you close quickly, even in a matter of days, providing you with much-needed cash and closure. This kind of streamlined cash sale is especially helpful for divorcing couples in Riverside who need to resolve property matters quickly and move forward.

Should We Sell the House Before or After Divorce?

According to California law, selling the house before the divorce is finalized can help preserve tax benefits, such as the capital gains tax exclusion for married couples, which allows you to exclude up to $500,000 in profit from the sale. 

Additionally, if you sell your Los Angeles house during divorce, it can simplify the division of assets and reduce potential conflicts during the proceedings. This approach can lead to a smoother and more efficient resolution, ensuring both parties can move forward more easily and with a clearer financial settlement.

Selling a Home During Divorce – Financial and Liability Considerations

Selling your house during a divorce in California involves important financial and legal factors:

• Community Property: California is a community property state, meaning assets acquired during the marriage, including the family home, are typically divided equally between spouses in a divorce.
• Capital Gains Taxes: Selling before the divorce is finalized allows couples to utilize a higher capital gains exclusion, potentially reducing taxes. Meet with a tax professional to understand the requirements.
• Mortgage Obligations: When selling, the mortgage must be paid off. Determine how the remaining balance will be handled and who is responsible for any shortfall.
• Division of Proceeds: The proceeds from the sale must be divided between the spouses. This should be clearly outlined in a legally binding agreement to ensure a fair and equitable distribution.

How to Sell a House During a Divorce

Selling your house during divorce can make a complicated legal matter that much more so. You can sell your house during a divorce, but family law in California is clear, and it requires you to obtain the court’s permission before selling your home.

If you and your divorcing spouse are in complete agreement on the matter of selling, however, the court is very likely to approve the sale—making it easier to sell a house fast during divorce in Riverside without legal delays.

A common reason for the court to rule on a home sale prior to the final divorce decree is if your house is at risk of being lost through foreclosure. If you need to sell your home during divorce proceedings, caution is well advised. 

Can I sell my house during a divorce?

Yes, you can sell your house during a divorce, but you’ll need to keep California’s divorce laws in mind as you proceed. Selling the house in a divorce is guided by California’s laws related to the division of community property. Generally, the marital home is considered community property – or a marital asset – which, in California, must be divided evenly between the two spouses in the event of divorce. 

When it comes to selling a home during a divorce, following the letter of the law is critical. If you and your spouse are willing to enter a written and signed agreement about the sale and are committed to splitting the proceeds evenly between the two of you, you can sell your house while you’re divorcing. 

An important step in selling the house, however, is working closely with your respective family law attorneys to ensure that you remain within the parameters of the law. 

Can I force the sale of my house in a divorce?

You can attempt to force the sale of your home in a divorce, but – because your divorcing spouse is not on board – you will need to take the matter up in court prior to putting the house on the market. Selling a house during a divorce in California involves complex laws that make working with a divorce attorney who helps you determine the best path forward an excellent plan.  

Who gets the house in a divorce?

In California, which is a community property state, the house is typically considered community property and is divided equally between the spouses unless otherwise agreed upon or ordered by the court.

What happens if one person wants to sell a house and the other doesn’t?

If one spouse wants to sell the house and the other does not, the issue may be resolved through mediation or court intervention. The court can order the sale of the property as part of the divorce settlement if an agreement cannot be reached.

Disagreements about selling the marital home are common during divorce. If one spouse wants to sell and the other doesn’t, resolving the issue might require mediation or even court intervention.

California’s Automatic Temporary Restraining Orders (ATROs)

In California, divorce proceedings trigger Automatic Temporary Restraining Orders (ATROs). These orders prevent either spouse from selling or transferring any property without the written consent of the other spouse or a court order. This is designed to protect both parties’ interests in the marital assets.

Court Intervention and Orders for Sale

If an agreement can’t be reached through negotiation or mediation, the court can step in. A judge may order the sale of the property as part of the divorce settlement. This typically happens when:

• The property represents a significant marital asset, and its sale is necessary for an equitable division of property.
• One spouse needs the proceeds from the sale to maintain their financial stability or relocate.
• The spouses are unable to agree on an alternative solution, such as a buyout or co-ownership arrangement.

The court will consider various factors, including the financial circumstances of both spouses, the needs of any children, and the overall fairness of the outcome.

Do you have to sell your house in a divorce?

Sometimes, we are asked, “Can I be forced to sell my house in a divorce?” The answer is yes, under highly specific circumstances, you can. The court will likely, however, only be moved to force a sale for financial reasons, such as covering divorce-related legal fees. Generally, you can’t be forced to sell your house in a California divorce unless your spouse obtains a court order that compels you to do so.

If your house is in danger of foreclosure, for example, the court may issue an order forcing a sale that you will be required to follow—especially relevant if you’re selling a home during divorce in San Diego due to financial distress.

It’s important to know, however, that California courts need a compelling reason for taking drastic action such as this. 

Selling property before the divorce settlement

Selling the house before divorce is generally considered the easiest and best option, but it requires teamwork on the part of you and your spouse, which may be in short supply in the lead-up to divorce. 

Selling property during separation or prior to divorce still requires cooperation on the part of both of you, but if you’re going to sell the house at some point anyway, doing so at this juncture comes with significant advantages. 

California has exacting property tax laws that include capital gains tax. If you sell your home prior to divorce, the cap for not paying capital gains tax on any profit made is twice what it would be if you waited to sell the house on your own post-divorce – when the cap will be set for a single person rather than for a married couple.

There are also residence requirements that must be met to avoid capital gains tax, including that the home must have been your primary residence for at least two years.

In addition to tax advantages, selling your home prior to divorce can bolster your ability to obtain a fair market value. Once you file for divorce, it becomes a matter of public record. If you’re looking to sell your house fast in Orange County during divorce, be aware that buyers may try to leverage your urgency to lower their offers.

A downside to putting your house on the market prior to divorce is that it makes the matter far more final, and if you are on the fence about selling your family home, it can take an emotional toll. There is also the matter of where you and your children will live while your divorce is pending, which can leave you feeling adrift just when you’re about to embark on one of life’s most difficult transitions.  

Selling a house during divorce

Selling the house during divorce may not be the best way to go, but sometimes, it’s a necessity. If selling the property during divorce proceedings is necessary to keep the home out of foreclosure or if you need the cash flow in order to pay the bills or legal expenses while your divorce proceeds, selling your home before your divorce is finalized may be your best option.

On the bright side, selling at this stage ensures that your tax exposure is more limited than it would be if you were single – as long as you qualify in terms of residency requirements.

Because divorce filings are a matter of public information, the value of the home can be affected. Regardless of what your house is worth, buyers recognize that the sale of a home during a divorce is generally inspired by financial need, and their offers will very likely reflect this fact.

It can’t be overemphasized that divorce comes with a heavy emotional burden, which can be difficult enough to endure without the added stress of selling your family home at the same time. Our homes tend to signify comfort and safety, and walking away from this port in a storm can be more emotionally challenging than you may have bargained for.

Finally, the sale of a house during a divorce requires you and your spouse to come to an agreement on the matter and to ask the court for permission to proceed. Many divorcing couples have a difficult time finding common ground on just about every topic, and this mindset can make selling your home during divorce more challenging.  

Selling a house after divorce

Selling the house after divorce can come with distinct advantages. If the court deemed the home your separate property in the divorce, selling it becomes your sole decision. You won’t need to formulate a plan with your ex, and you can proceed on your own terms. 

For example, if you want to keep the house as your family home – in an effort not to uproot your children at this difficult juncture in their lives – it’s your right to do so as long as you can handle the mortgage. 

If the court orders you to sell the house post-divorce in order to divide the proceeds, it’s a different matter. You’ll need to proceed with the house sale in unison with your ex, and the capital gains tax advantage continues to apply – the cap before capital gains taxes are owed is double what it would be if you sold the house on your own. 

Understanding Capital Gains Tax Benefits and Divorce

When selling your home during or after a divorce, understanding the potential capital gains tax implications is crucial. The timing of your sale can significantly impact your tax liability.

Capital Gains Exclusion: Married vs. Single

• Before Divorce: If you sell your home before your divorce is finalized, you and your spouse can potentially exclude up to $500,000 in capital gains from your taxable income. This significant benefit applies if you meet certain ownership and use requirements (e.g., the home was your primary residence for at least two of the five years before the sale).

• After Divorce: If you sell the home after your divorce, your exclusion drops to $250,000 per individual. This means that if you sell the home on your own, you’ll only be able to shield half the amount of gains from taxes compared to selling while still married.

This difference in capital gains exclusion can significantly impact your financial situation after a divorce. Selling before your divorce is finalized can potentially save you a substantial amount in taxes, especially for couples pursuing a divorce home sale in San Bernardino with high equity at stake.

How to Sell Your House During a Divorce in California: 3 Effective Options 

If you recognize that you need to sell your house during a divorce, you should know that you have options. For example, if you and your divorcing spouse are in agreement on the matter, you can speed up and simplify the process by selling to one of the reputable companies in Southern California.

Other options include one of you selling your interest in the home to the other, one of you taking another martial asset to offset your community property interest in the home equity, or both of you continuing to own the home together while one of you lives in the house with your children. Better understanding your options can help you make the right choice for you.

1. Sell to real estate investors 

An excellent option if you need to sell your house during divorce is selling to cash home buyers in Southern California who make the process as painless as possible by eliminating the need for all the following:

• Making repairs
• Sprucing up the place in order to sell
• Hiring an appraiser to determine the value of  the house
• Working with a real estate agent 
• Staging the house and keeping it ready for viewings while you live in the home
• Scheduling, preparing for, and vacating your home for open houses and viewings
• Coming to a mutual agreement with your spouse regarding acceptance of an offer 
• Waiting on the buyer’s financing

At SoCal Home Buyers, we appreciate your need to sell your home during divorce, and we are well prepared to make you a fair cash offer that is based on our in-house inspector’s tour of your home, which we can schedule whenever is convenient for you. All it takes is a call.

2. California divorce home buyout by a spouse

Wondering how to keep your house in a divorce? It may be possible. If you and your spouse don’t want to sell the property, there is the option of one spouse coming up with a buyout for the other’s equity in the home. 

For example, if your goal is to stay in the house and you can’t afford to buy your spouse out directly, you may be able to buy them out with a community property other than your home – if your estate is large enough.

Who gets the house in a divorce in California depends upon a large range of factors that can include whether or not you have a prenup, the divorce agreement you create, the matter of who wants the house, the matter of who wants to stay in the home, and beyond. 

These decisions are often made between the divorcing couple, but they can also be determined by the family court. If one of you is awarded the house at divorce trial, the option of selling a house after a divorce is theirs, and they can proceed according to their own priorities.

3. Continue to co-own the home together

Another option that many couples with minor children choose is continuing to co-own the house together. This works well if one of the spouses wants to continue living in the house while the children are still at home, which can help make the divorce and its aftermath less jarring for them. 

One spouse may live in the home full-time while the other has visitation with the kids after buying a new place. Some parents, however, allow the children to live in the home while each parent moves back and forth, which is referred to as nesting.

When the time comes, and the home is sold, you’ll still be able – as co-owners – to take advantage of the higher capital gains tax limit – but only if both of you satisfy the ownership and use requirements.   

How to Sell a House During Divorce: Negotiating and Finalizing the Sale

Selling the house during a divorce requires careful negotiation and attention to detail, especially when emotions are running high. Here’s how to navigate this process effectively:

• Open Communication: Maintaining open and honest communication with your spouse throughout the selling process is crucial. This helps avoid misunderstandings, disagreements, and potential delays. Discuss your expectations, concerns, and desired outcomes openly and respectfully.
• Legal Counsel: It’s highly recommended that both spouses consult with their respective divorce attorneys during the sale process. Your attorneys can provide valuable guidance, protect your interests, and ensure that all legal requirements are met. They can also help you understand the implications of different decisions and negotiate favorable terms.
• Choosing a Buyer: If you’re not selling to a cash buyer, carefully evaluate the offers you receive. Consider not only the price but also the buyer’s financial stability, the proposed closing date, and any contingencies included in the offer. Choose a buyer who appears reliable and capable of closing the sale quickly and smoothly.
• Closing Documents: Before signing any closing documents, thoroughly review them with your attorney to ensure they accurately reflect the agreed-upon terms. Pay close attention to details such as the sale price, closing date, division of proceeds, and any contingencies or responsibilities assigned to each party.

Preparing the House for Sale

Even amidst the challenges of a divorce, preparing your house for sale is crucial to attracting potential buyers and securing the best possible price. Take these steps to prepare your house:

• Declutter and Depersonalize: Remove excess belongings and personal items to make the space feel larger and more appealing to potential buyers.
• Necessary Repairs: Address any necessary repairs, such as fixing leaky faucets or patching holes in walls, to present the house in good condition.
• Staging: Consider staging the house to showcase its best features and create an inviting atmosphere that helps buyers visualize themselves living there.
• Cleanliness: Maintain a clean and tidy house throughout the showing process to make a positive impression on potential buyers.

Need Help Selling a House During Divorce in California?

SoCal Home Buyers understands the dilemmas related to selling a house in divorce situations, and in response, we offer a smooth purchase process that can put this difficult matter behind you without the hassle, expense, and time commitment of working with a real estate agent. In fact, we can help you get things squared away with the following four easy steps:

Choose your closing date, and leave the rest to us. You can choose payment via check or wire transfer. It simply doesn’t get any easier.

Give us a call at 951-331-3844—or fill out the short form below—to request your fair cash offer.

Await our prompt response to discuss your property in greater detail and schedule a one-time inspection that allows us to offer the highest amount possible.

At the time of the inspection, our in-house inspector will quote you a fair cash offer, and if you’re on board, you can consider your home sold!

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