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Keep, Buy Out, Sell? How a Marital Residence Is Handled During Divorce

White Picket Fences

For many couples, the family home accounts for a sizeable portion of their marital estate. Should you decide to divorce in Texas, what happens to the marital residence? Who gets to keep it? Do you have to sell it? It depends on several factors, and sometimes it gets complicated.

The matter of community property vs. separate property is key

Texas is a community property state, which means property acquired during the marital union is subject to fair and equitable distribution between the two parties upon divorce. Separate property refers to the property a party owned prior to the marriage, which typically stays with that party following divorce (more on separate property below).

If the marital residence does qualify as community property, who gets to keep the home and under what terms? (This may not even be an option when neither party can afford the house alone.)

Should one of the parties have the resources to afford the home, he or she could offer a buyout to the other party to prevent the sale of the marital residence. However, things can get complicated when the parties can’t agree on the value of the home or when one or both parties have emotional ties to the home.

What happens if both parties can afford to and want to keep the marital residence?

This is one of those times when you shouldn’t underestimate the significance of the temporary orders. In Texas, when the court orders one party to remain in the house, oftentimes, if that party has the resources to afford it, that order will stand at the end of the case.

Another important factor to remember is the stay-at-home mom (or dad) and breadwinner scenario. In Texas, when one party is the primary conservator of the children, and the breadwinner just wants them to move out—because he or she can afford the house and a buyout of the other party—the court typically agrees to those terms.

Our advice? Don’t marry the asset. The bottom line is: If the other party wants to pay top dollar for the home, and you don’t have to pay real estate and other fees, you may be a lot better off than you would be if you bought it.

Back to homes as separate property, which also gets complicated …

If one of the parties purchased the home prior to marriage, the residence would be considered that person’s separate property. However, if the other party has helped pay down the mortgage or invested cash in home improvements (beyond normal wear and tear), he or she may be able to file a reimbursement claim to recoup some or all of those funds.

Refinancing a home during marriage that came into the marriage as separate property can also complicate matters during a divorce. For example, a lot of people do a simple interest refi when interest rates go down, where both parties end up on the banknote for the refinance.

That doesn’t mean the deed, the title of the house or the nature of the property—as separate—has changed. However, in Texas, the presumption is community property, which means the burden is on the party trying to prove separate property. That party needs to be prepared to provide the necessary documents as proof, and hiring a law firm experienced in navigating the intricacies of such matters is essential.

Extra headaches arise for couples that purchase a home together prior to marriage

Here are somethings most real estate agents and mortgage brokers forget to mention to couples who buy a house together before tying the knot. If you decide to get a divorce, dividing that property is probably going to be a nightmare.

Here’s why. In this buy-house-before-marriage scenario, both parties own an undivided interest in separate property of the house, and the Texas family court is not able to divide that separate property. The family court judge can only confirm the separate property exists. Unfortunately, we see this nightmare scenario at our Fort Worth law firm on a regular basis.

Unless the couple decides to sell the home and agrees to split the money left after the sale, they will need to go to a different civil court to divide the property. That also means different laws, different attorneys and more legal expenses.

Another option is to continue owning the home together as tenants in common, post-divorce. You may be divorced, but you’re going to be married by way of asset post-divorce. Now that sounds like fun …

Have questions about the sale of marital property in Tarrant County?

The experienced family lawyers at our Fort Worth family law firm are here to help. To schedule a confidential case review with our founder Justin Sisemore, contact our office by phone at (817) 336-4444 or connect with us online.

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