For many divorcing couples, what will happen with a house after the divorce is a critical concern for both spouses. These concerns only increase when title to the house is only in one of the spouse’s name. For the spouse who is not on the deed, it is important to take steps to protect their interest in the house to prevent the other spouse from borrowing against, selling, or losing the house to foreclosure prior to a final Judgment.
One of the best tools a spouse can use to protect their interests in a house that titled in the other spouses’ name is to file and record a “Notice of Pendency of Action” against the house. This document becomes a public record, which when properly drafted and recorded gives notice to the other spouse, and anyone else that there are pending court proceedings regarding this house. With this notice, the other spouse will not be able to effectively sell the house to a third party. This notice will come up on any title search and will be flagged to the attention of any buyer of a house or any bank who might lend funds to purchase the house. It also provides a mechanism for you to be notified about important occurrences with the house, such as default and foreclosure, allowing you to step in and take other actions to protect your interests. Also, this Notice of Pendency of Action may work to prevent a party from borrowing against the equity in their house during the divorce, either through a home equity line of credit or a Family Law Attorney’s Real Property Lien.
The Notice of Pendency of Action is a tool which can be used in conjunction with the Standard Family Law Restraining Orders to prevent one spouse from taking actions to unilaterally undermine the other spouse’s interest in a property item away during a pending family law proceeding. Use of the notice of pendency of action gives additional “teeth” to the Standard Family Law Restraining Orders and allows for additional remedies which you may not have been able to use otherwise.
The Notice of Pendency of Action is a valuable tool and should be used carefully and properly. This document puts a “cloud” on title and once the family law proceeding is finished needs to be removed to avoid future hardship for both parties. Further, there are circumstances when the court can remove the Notice of Pendency of Action from the house.
A final related note, it is important to remember that in California community property law that whose name is on a house is not the final determinative issue in deciding who gets the asset and whether the other spouse has to be “bought out” from the house. Rather, there are multiple ways in which the spouse not on title can claim an interest, including seeking a determination that the asset is community property in spite of its title, seeking a percentage of the house under a Moore/Marsden theory, or requesting reimbursement for expenses paid towards another spouse’s separate property home. Therefore, it is important to consult with an experienced family law attorney to discuss the use of this tool and what interest, if any, you may have in a house in the other spouse’s name.