Selling Your House During Divorce in Colorado: Laws & Options

Can I Sell My House During a Divorce in Colorado?

Yes, you can sell your house during a divorce in Colorado, but only if both spouses agree in writing or if a judge orders the sale. Upon filing for divorce, an Automatic Temporary Injunction (ATI) immediately goes into effect under C.R.S. § 14-10-107. This injunction freezes marital assets. Selling without mutual consent violates this court order and can result in serious legal consequences.

The Legal Hurdle: Understanding Colorado's Automatic Temporary Injunction

When either spouse files for divorce in Colorado, a legal freeze automatically kicks in. This is called the Automatic Temporary Injunction, outlined in C.R.S. § 14-10-107(4)(b)(I).

In plain English, the ATI prevents both spouses from:

• Transferring marital property (including selling your house)
• Encumbering assets (taking out new loans against the home)
• Concealing property or funds from the other spouse
• Disposing of marital assets without mutual agreement

The Workaround: Mutual Agreement (Stipulation)

If both you and your spouse agree to sell the house, you can file a Stipulation with the court. This is a written agreement signed by both parties that specifically allows the sale. Once filed and approved, you can proceed with selling—whether through a traditional listing or a direct sale. This is where having a Colorado divorce attorney becomes essential.

Option 1: Sell the House (The Clean Break)

Selling the home is the most common choice during divorce. It provides a clean financial break and converts an illiquid asset (the house) into cash that can be divided.

Traditional Listing

Potential Benefits:

• Highest possible sale price in most market conditions
• Professional marketing and negotiation support

Potential Challenges:

• Requires cooperation on repairs, cleaning, and staging
• Both spouses must agree on showing schedules
• Can take 30-90+ days to sell and close
• Creates friction points if communication is difficult

Pro Tip: If you do list traditionally during divorce, consider using a Transaction Broker rather than a Seller's Agent. A transaction broker represents the transaction itself, not either party.

Direct Cash Sale: A Different Approach

Some couples find that a direct cash sale removes conflict from the equation:

• No repairs needed: You don't have to agree on what needs fixing
• No showings: No arguments about keeping the house clean
• Privacy: No public listing or "For Sale" sign
• Speed: Close in as little as 7-14 days once both parties agree
• Pre-set price: An offer price is determined upfront, removing negotiations between spouses

Option 2: The Buyout (One Spouse Keeps the House)

Maybe one spouse wants to stay in the home. Perhaps there are children involved, and stability matters. A buyout allows one spouse to keep the house while compensating the other for their share.

The Biggest Challenge: Today's Interest Rates. Many couples bought or refinanced when rates were 3-4%. Current rates are significantly higher. Refinancing could nearly double the monthly payment, making buyouts financially impossible for many spouses.

Option 3: Deferred Sale (Co-Ownership After Divorce)

Sometimes couples choose to keep the house jointly for a set period. This is most common when children are involved and parents want to minimize disruption.

The Risks:

• Continued financial entanglement with your ex-spouse
• If one spouse misses payments, both credit scores suffer
• Disagreements about maintenance, repairs, and property decisions

Most divorce attorneys recommend avoiding this option unless absolutely necessary.

Who Gets the House? Understanding Colorado's Equitable Distribution

Colorado is an equitable distribution state, not a community property state. Equitable means fair, not necessarily equal. A judge won't automatically split everything 50/50.

When deciding property division, Colorado courts look at:

• Each spouse's contribution to acquiring the property
• The value of property each spouse is receiving
• Economic circumstances of each spouse at the time of division
• Custody arrangements and whether keeping the home benefits the children

Tax Implications When Selling During Divorce

When you sell your primary residence, the IRS allows you to exclude gains from taxation:

The Timing Trap: If you divorce before selling, each spouse potentially has only the $250,000 exclusion. If you sell while still married, you may qualify for the $500,000 joint exclusion. Always consult a qualified CPA.

Frequently Asked Questions