Can You Sell Your House In The Middle Of A Dissolution Proceeding?

When you file for a Dissolution, certain restraining orders automatically go into effect. These are commonly referred to as standard family law restraining orders. These restraining orders can be found on the back of the Summons. One, in particular, states neither party is to dispose of any real property without written consent of the other party or an order of the court. What generally occurs in divorce proceeds is that one spouse will generally leave the family home and set up residence elsewhere and the other spouse will remain in the former family home. This is when things get difficult because now two households must be financed. Further, once support is established by the courts the spouse who remains in the family residence may find that there is simply not enough money to maintain the fixed overhead including the mortgage, insurance, and property tax. Mortgage payments then get paid late or a month gets missed and lenders start calling both parties about missed payments. If both parties are in agreement that the house needs to be sold then there really is no issue. But what happens when the in-spouse (the spouse that remain s in the family home) is not willing to sell? Maybe there is no equity, or the house is upside down, and thus no incentive for the in-spouse to sell the house. Typically assets are ordered sold or divided at the time of trial which can be months if not years away.

Family Code section 2108 indicates that upon a finding of good cause, a court may order the liquidation of an asset to avoid an unreasonable market or investment risks given the relative nature, scope and extent of the community estate. Basically this means that the sale must be in the best interest of the community. Sometimes this is not easily shown especially if there is no equity in the residence. If the mortgage is already behind in payments and foreclosure notice ha s been given, how would a sale benefit the community? The damages is already done to the parties’ respective credit so that argument does not always work. Maybe a short sale (where the lender takes less than what is owed on the balance of the mortgage) or Deed in Lieu of foreclosure (where the parties simply give the property back to the lender and thus save the lender the expense of a foreclosure) is a better option. Further, more and more loan modifications, and to some extent refinancing, are being attempted especially with willing lenders. Thus, certainly saving the home, especially if there are minor children, is an attractive alternative. Thus, while liquidating real property may be an option one has to be careful and analyze this code section along with all other factors that can come into play regarding an issue like this.