Who Gets The House In A Divorce?
One of the first things you need to ask yourself while ending your marriage is who gets the house in a divorce? This question has a lot of bearing on your ability to move on and make a fresh start.
You need to know the legal answers to ensure that you don’t get a raw deal or forsake your rights due to a lack of awareness. It becomes even more imperative to address this issue if the divorce involves children and whose well being remains a prime concern.
Community property vs Separate property
So who gets the house in a divorce? It depends on where you are filing for divorce. Texas is among nine states in the U.S. which makes the distinction between community property and separate property. Let’s look at the below scenarios to understand how this difference works.
- You bought the house prior to getting married
- You inherited the house from your parents
- You received the house as a gift from your grandparents
- You purchased the house after getting married
In the first three situations the judge would consider the house to be separate property. The last example however comes under community property.
Texas law considers any property acquired after marriage as community property. Under the law, even if the deed and mortgage are in your name, a house is jointly owned by both spouses.
Some factors to consider while deciding if a house is community or state property are
- Date of purchase
- Property’s origin
- Source of financing
Under the state’s law, the judge can apportion only the assets which fall under community property between the spouses. The law considers a house you inherit or receive as a gift as separate property. Any property that you fully own prior to marriage also comes under separate property. This property remains beyond the ambit of the divorce judgment.
Does the location matter?
If you own the house in another state, Texan law does not provide much respite. If you bought the house post marriage and are filing for divorce in a Texas court, the law treats the house as quasi-community property.
This means that the house will be subject to partition under the divorce laws of Texas. The laws of the state where you file for divorce take precedent over the laws existing in other states. Even if the state where the house is located is a common property state, where the deed holder is the sole owner,
Is the house I own before marriage mine?
The distinction between separate and community property is not always so straightforward. Community assets include real estate, automobiles, salary and income from your business post marriage. A vital tip to know is that any outstanding debt and liabilities is also considered as community property.
So you may have bought a house in Richmond prior to getting married. You continue to make mortgage payments or make improvements to the house after marriage. In this situation, the judge would consider the amount spent as community property or equity in the house.
For example, you buy a house costing $150,000 before marriage. You then renovate the house after getting married which costs $30,000. The house’s value under community property would be $30,000. The judge may ask you, in case you receive the house, to pay $15,000 to your soon-to-be ex-spouse as part of the ruling.
What options do I have?
This brings us back to our original question. So who gets the house in a divorce? The two main options on the table can be stated as
- Sell the house if its value has gone up and split the proceeds according to a negotiated ratio
- One spouse gets the house and buys the other spouse’s equity in the house while refinancing
The first option, while the more straightforward among the two, has its own share of impediments. You will need to clarify beforehand about the nitty-gritty such as listing, realtors, repairs, maintenance and bills. It’s always a good idea to get a home appraisal done before going ahead with this alternative.
Additionally, you will need to confirm at the outset about who will decide matters related to price and acceptance of offers to avoid any misunderstandings later. You need to set forth the details clearly as any assumptions could lead to further complications and costs. Unforeseen events include the house not selling quickly or going for less than the expected amount.
How will a mortgage affect the division of property?
The second option where in one spouse buys out the other’s stake and refinances the mortgage is slightly more complicated. If the mortgage is still due, the judge may consider awarding the house to the spouse who is financially sound to make the payments.
For example, $50,000 is still owed under the mortgage for a home which now costs $150,000. This means that the community property or equity of both spouses in the house is $100,000. The spouse who receives the home will need to pay $50,000 to the other spouse and take a new mortgage for the remaining amount. You split only the equity that you jointly hold in the house and not its actual value.
Any mortgage payments made during the court proceedings by either of the spouses are adjusted later according to who receives the house. The spouse who gets ownership of the house will have to refinance before a court-ordained date. If the spouse fails to observe the decree, the judge may order the house to be sold and the proceeds to be divvied up between the spouses.
Is there any protection for the spouse who accepts payment in lieu of the house?
The court may grant the spouse, who is not getting the house, a lien on the property to secure the amount owed. The lien or deed of trust would be released after the equity amount is paid and the new refinancing agreement takes precedent.
A point to remember. Although the court may have granted the house to a spouse, the other spouse would still be liable to pay the debt until a new mortgage is taken out. Consider this scenario. The spouse who receives the house defaults on the mortgage. The creditors may then go after the other spouse to seek repayment if a new mortgage has not been taken.
You also need to prepare for certain contingencies. The divorce proceedings could drag on for several months. The spouse who received the house could put off refinancing until the last minute. In such situations, a spouse may have to request a loan modification or assumption from the lender in the interim to avoid facing claims for repayment.
To avoid such a situation the judge may ask both spouses to sell the house if none of them are financially sound to repay the mortgage by themselves. This option is favored by spouses who are older and whose children are grown up. This is also a feasible alternative for couples who do not have children.
What are the different methods to divide property?
So who gets the house in a divorce? The choices that you have to settle this matter are:
- Negotiation: To come to a mutual agreement about dividing the assets via third party mediation
- Litigation: To let the court decide who gets what if you are unable to arrive at a consensus
The first option provides you with a modicum of control in terms of bargaining power while the latter option is more uncertain and depends on the judge’s discretion. Most judges insist that couples wishing to file for divorce first go through mediation to decide on the future course of action before opting for litigation. Going the negotiation route also significantly lowers the cost of the divorce taking into account the litigation and court fees.
A typical negotiation session includes both spouses their respective attorneys and sometimes a neutral mediator. The issues discussed include custody of children, disclosure and division of assets and liabilities and compensations for any perceived losses. If you come to an agreement you will need to fill in a Final Decree of Divorce form, which a judge will accept and validate under the laws of the state.
However, if both parties fail to arrive at an understanding the proceedings shift to the court of law.
How does a judge divide the property?
Under the Texas Family Code Chapter 7, the divorce court distributes the community property between the spouses in a “just and right” manner concerning both parties and their children while applying “equitable” principles.
In practice, a judge has some discretion in how the law is interpreted. The judge may consider certain parameters while deciding who gets the house in a divorce. These include disparity between the spouses’
- Income: Who is making more money?
- Education: Who has a college degree?
- Employability: Who has extensive work experience?
- Age: Who is closer to retirement?
- Health: Is anybody suffering from a chronic ailment or has special needs?
- Personal Finances: Who has more assets, and who has more liabilities?
The most important criterion, if applicable, is who receives custody of the children. The spouse who gets custody often is in a better position to claim ownership of the house and minimize disruption in the children’s lives.
Another factor that the judge could consider while granting custody of the house is the relative fault of a spouse in causing the divorce. This could be in the form of adultery, addictions, violence, spendthrift behavior and fraud.
Is equitable and equal the same?
A point to note is that equitable does not necessarily mean equal in legal parlance. In some cases the judge asks both spouses to sell the house. If you are looking for a 50/50 settlement of assets you may find that the court has a different view of the situation.
The court may have ordained a 60/40 settlement as equitable taking into consideration overall financial position of both spouses among other factors.
The court may award a spouse who does not receive the house other assets to ensure equitable distribution. The assets could include vehicles, savings, retirement plans, bond and stock investments and jewelry, unless it’s a gift. So it’s always a good idea to know what you are giving up to receive something during the negotiation phase itself.
Is there any way to safeguard separate property?
A per-nuptial or post-nuptial agreement is an option to avoid getting into the argument over who gets the house in a divorce. Such an agreement needs to spells out clearly what’s to be considered as community property and what’s separate.
You will have to legally validate the prenup for it to be considered legitimate in a court of law. You may also need to make mortgage payments for your house from a separate account under such an agreement to avoid commingling of assets.
A word of caution. Don’t buy any property or make any large investments until your divorce is finalized. You are still legally married until the divorce is granted. Any new assets will be treated as community property, complicating the proceedings.
What happens after the final decree of divorce?
A spouse receives the house legally only after the judge signs the decree of divorce. The decree contains a complete legal description of the house and the terms and conditions under which the house is being transferred to the spouse.
The other spouse then signs a special warranty deed transferring any rights to the sole property owner. The document is filed in the County Clerk’s Office as a public record of the proceedings. This document allows you to resell the property later if the need arises.
Where do I live during the divorce?
Divorce proceedings take anywhere from three months to a year to be finalized. You will need to negotiate about accommodation in this period as both spouses have a right to continue to live in the house while the divorce is pending. Rest assured that if you move out temporarily it does not affect in any way your rights to the house.
A spouse who does not have any alternative accommodation or income can file for a temporary injunction to exclude the other spouse from the house during the divorce proceedings. A judge could also issue a protective order if a spouse’s conduct is deemed as unsafe. This includes situations where in the spouse’s actions could cause damage to the property and diminish its value.
Begin a new chapter in your life towards self-sufficiency
Your house is one of your biggest assets, and you should ensure that it does not turn into a liability. Whether you want the house or want the proceedings from its sale, you need to be clear about the below issues.
- What are your rights under the state’s laws?
- Do you want custody of the children, if any?
- What are your goals post the divorce?
You will need to be extremely objective to ensure that the divorce outcome does not put you in a financially and emotionally compromised position. You may want to get over with it quickly, however a hasty decision could impact the quality of your future life.
The right legal advice will help you to come out of this phase with hope and optimism and equally importantly provide you with the resources to make a fresh start.