The marital home is one of the most valuable pieces of property a couple owns, and therefore can garner a lot of conflict when it has to be divided during a divorce. One issue that could arise is that one spouse tries to or succeeds in selling the home during the divorce process. In California, assets in a marriage are considered to be community property. This means that any property acquired during a marriage has to be split evenly in case of a divorce, including the marital home. So, what happens if a spouse sells the community property home in the middle of a divorce?
Once the Petition of Dissolution is filed, which begins the divorce, neither spouse can do anything with the community property, including selling it. This is because the Petition of Dissolution is filed along with a Summons, which includes orders called automatic temporary restraining orders, or ATROS. ATROS forbids both parties from disposing of or concealing any property. Therefore, selling the community property home is prohibited.
The divorce process also includes documents called preliminary financial disclosures. These documents require both parties to fully disclose and be transparent about all assets and debts, including separate property. The documents include disclosure of separate property because there is often confusion about what is actually considered separate property. It is common for a party to wrongly assess what property is separate and communal, which spurs conflict. Preliminary financial disclosure prevents such conflict, and should classify the home as community property if it was acquired during the marriage. So, preliminary financial disclosures also declares that a spouse cannot sell the community property marital home during divorce.
Even though a spouse is legally forbidden from selling the home during divorce, they may still choose to engage in fraudulent behavior and sell the community property home. If a spouse fraudulently sells the property without the other spouse’s knowledge or consent, there are 2 things the innocent spouse should do.
First of all, the innocent spouse should immediately file a motion with the court requesting an injunction or an order that prevents the other spouse from causing further damage. This is necessary because, on top of selling the community property home, the guilty spouse could use the sales proceeds as their own and start spending the money. The innocent spouse needs to take action as soon as they learn of the fraudulent behavior, or else they risk losing out on all the money in the case that the guilty spouse spends all the money before the divorce is finalized.
The other thing the innocent spouse should consider is filing a motion for sanctions to include attorney’s fees. A sanction is a sum of money that is made payable to the innocent spouse, which serves as a form of punishment for the fraudulent spouse. In conclusion, it is forbidden for a spouse to sell a community property home before the divorce is finalized, unless the parties get a court order where they mutually agree to allow the sale. It is always a good idea to closely monitor all assets during a divorce process,a and to consult with an attorney if there is any suspicion of illegal activity from the other spouse.