The family home is generally the largest asset owned by a married couple that must be divided after divorce. In the past, if the property was awarded to one spouse it required a “buy-out” coupled with refinancing the loan in the purchasing spouse’s name alone. This often resulted in less favorable terms such as a higher interest rate and caused divorcing couples to sell the property.
On January 1, 2025, a new law took effect in California that will make it easier and reduce the financial hardships often associated with this transfer. Civil Code Section 2951 will allow the purchasing spouse to take over an existing conventional loan on a primary residence, including the remaining balance, interest rate and terms, rather than having to apply for a new mortgage with less favorable terms so long as they can qualify. This new law will only apply to loans that originated on or after January 1, 2027, therefore is unlikely to help those in the process now but will have a significant impact in the future.
