Can I make a “big” purchase before my divorce or legal separation is finalized?

Like so many legal answers, the answer to this question is “it depends.”  At the commencement of divorce and legal separation cases, Automatic Temporary Restraining Orders (ATROs) are issued and effective against both parties (see Summons form FL-110).  One of those ATROs prohibits parties from “transferring, encumbering, hypothecating, concealing, or in any way disposing of, any property, real or personal, whether community, quasi-community, or separate, without the written consent of the other party or an order of the court, except in the usual course of business or for the necessities of life.”

Often, but not always, a big purchase is preceded by the liquidation of another asset.  For example, many sell or trade-in their old vehicle in order to acquire a new vehicle.  Similarly, most people sell one home before purchasing another.  To the extent that a party wants to acquire a new vehicle or home during the pendency of a divorce or legal separation action, he or she may not do so if the transaction requires selling or encumbering a community property asset.  However, the other party may give their written consent or the court may issue an authorizing order allowing the party to do so. 

Another ATRO requires parties to “notify each other of any proposed extraordinary expenditures at least five business days prior to incurring these expenditures and account to the court for all extraordinary expenditures made after these restraining orders are issued.”  So, even if the anticipated “big” purchase does not require the sale or encumbering of another asset, parties have an obligation to notify the other party in advance of their planned acquisition.  

The safest practice is to avoid making any “big” purchases during the pendency of a case.  If that cannot be avoided, the next best practice would be to only use one’s separate property earnings, savings, and credit to acquire the new asset, after notifying the other party at least five days in advance.  Of course, if the proceedings are amicable, and the parties are able to agree in writing to disposing of or encumbering other assets to make new acquisitions, there is no problem.

Family law matters are much more complex than they appear on the surface.  Making big acquisitions while a case is pending has the ability of making a complicated and stressful situation even more complicated and stressful.  Big purchases are also a great way to create resentment in the other party, which can make cases more difficult to settle outside of expensive litigation.  It is important to keep in mind that many big financial transactions include loan applications.  Those loan applications are discoverable by the other party and their attorney, and can be used as proof of income for determining support obligations and awards of attorney’s fees.  

In all, it is possible to make “big” purchases (e.g. a house or vehicle) during the pendency of a case under certain circumstances.  However, in some situations doing so may turn out to be more of a hassle than it was worth.  If such purchases can be delayed until after a case is finalized, it may be prudent to wait.