Buying a House While Separated: What Happens to the Home in Divorce?

What happens to the family home when you divorce is complicated enough, but what if you moved out during the separation period and bought a new house for yourself? Can your spouse claim partial ownership? Is there a risk that you might be forced to sell and move again?

Is Property Bought During a Separation Period Considered Marital Property?

 In New Jersey if you used any money acquired during the marriage to purchase the house or pay the down payment, the home will likely be considered a marital asset. Even using marital funds to pay for the inspection could put you in trouble.

How Might a Court Determine Who Owns the House?

When the divorce case gets to court, the court will determine whether your spouse has partial ownership and, if so, how much. The court will look at whether marital funds were used for the down payment or any costs related to acquiring the property? You should start a new bank account when you are separated and use only that money to pay for the house. In New Jersey, the money you earned before you married and did not put into a joint account, the money you received as a gift, or the money you inherited are also not considered marital property.

If the court does decide that your spouse has partial ownership, you will have to make up for this with other assets or sell the property and split the proceeds. They will determine this based on how much you took from marital assets. For example, if all you took was a $20,000 down payment, the court will likely rule that your spouse owns $20,000 of the house, which you may well be able to buy out. If, however, you have been paying the mortgage payments out of a joint account, you might find that they rule your spouse owns half of the house.

What to Do if your Spouse Has Partial Ownership

So, what should you do if the court does decide your ex has partial ownership of your house? The obvious answer is to sell the house and split the proceeds, but moving again is not likely to be in your best interests.

The best way to proceed is to haggle using other marital assets. For example, if they are keeping the old house, the math may work out to allow a simple trade… essentially buying each other out. This may not work if the numbers are different, but it is definitely an approach worth trying. Your buyout can also be on a payment plan if needed.

The best answer, in other words, is to buy your spouse out if possible, and you may be able to do this with other marital assets, such as vehicles. If you do have to sell the house, talk to your lawyer about ensuring you get your fair share of the value, which you can then put towards another property.

Is It Better to Wait Until the Divorce Is Finalized?

The other option, of course, is to wait on buying a house until you have the divorce finalized. The downside to this is that you will be paying money (rent) in the interim, without building any equity. Of course, you will still have to move again.

Depending on the length of your separation, though, simply waiting until after the divorce to buy a home can be the easiest option moving forward. It also gives you time to establish how much house you can actually afford on your own or, if you were financially dependent on your spouse, to work toward getting a better job.

Sometimes, people may continue to cohabit (especially if there are children) until the divorce is finalized. This is obviously only an option if you are still on reasonable terms, and no violence or abuse is involved. For many people who are used to living in their own homes, renting for a period of time might be somewhat disconcerting. However, it does eliminate the risk of buying a home while separated but not divorced

Buying a house while going through a lengthy divorce can be a challenging process, and you should get all of the details right so that your ex does not have a claim on your new home. If you are thinking about filing for divorce in New Jersey, call the Law Offices of Peter Van Aulen at 201-845-7400 for a free consultation.