LEGAL RESOURCES
What Happens to the House in a Texas Divorce?
The Family Home Is Often the Largest Asset
For many families, the marital residence is the most valuable asset they own. It is also the asset that carries the greatest emotional significance. In addition to its financial value, the home often represents stability for the children and may be the place where the family has lived for many years.
One of the first questions clients ask is, “Who gets the house?”
There is no automatic answer under Texas law.
The court first determines whether the home is community property, separate property, or contains both separate and community interests. The court then determines a just and right division of the community estate under Texas Family Code § 7.001.
The House Is Not Automatically Divided 50/50
Many people assume that if the home was purchased during the marriage, each spouse automatically receives half.
Texas law does not require an equal division.
Instead, the trial court has broad discretion to divide the community estate in a manner it considers just and right. The Texas Supreme Court recognized in Murff v. Murff, 615 S.W.2d 696 (Tex. 1981), that courts may consider numerous equitable factors when dividing community property, including each spouse’s earning capacity, fault in the breakup of the marriage, separate property, future needs, and other circumstances.
Every case is different.
The Court Must Determine Whether the Home Is Community or Separate Property
The date the home was purchased is often one of the most important facts.
If the home was acquired during the marriage, it is generally presumed to be community property under Texas Family Code §§ 3.002 and 3.003, unless one spouse proves otherwise by clear and convincing evidence.
If one spouse purchased the home before the marriage, Texas follows the inception of title doctrine, meaning the home generally remains that spouse’s separate property even though mortgage payments may continue during the marriage. See Wiggins v. Wiggins, 347 S.W.2d 589 (Tex. 1961).
That does not necessarily end the analysis. The community estate may still have reimbursement claims if community funds were used to reduce the mortgage principal or make certain capital improvements.
Determining the Home’s Value Is Critical
Before the court can divide the house, it must determine its fair market value.
If the parties disagree regarding value, a licensed real estate appraiser is often retained to prepare an appraisal and testify at trial if necessary.
Although homeowners may testify regarding the value of their own property, expert testimony is generally more persuasive, particularly in cases involving substantial equity.
If neither party hires an appraiser, courts frequently look to the county appraisal district’s value or other evidence presented at trial. That value, however, does not always reflect the home’s actual market value.
Equity Is Usually What Is Being Divided
The court is generally concerned with the home’s equity, not simply its value.
Equity is calculated by subtracting the outstanding mortgage balance and any valid liens from the home’s fair market value.
For example, if a home is worth $650,000 and the remaining mortgage balance is $250,000, the property contains approximately $400,000 in equity.
That equity becomes part of the community estate unless a separate property claim or reimbursement issue changes the analysis.
One Spouse May Keep the Home
Many divorcing couples decide that one spouse will keep the residence.
This commonly occurs when one parent will continue residing in the home with the children or when one spouse has the financial ability to refinance the mortgage.
If one spouse keeps the home, that spouse generally compensates the other spouse for his or her share of the equity through a cash payment or by receiving fewer retirement accounts, investment accounts, or other community assets.
The court attempts to divide the overall estate fairly rather than dividing each individual asset equally.
Refinancing Is Often Required
Even if one spouse is awarded the home, both spouses may remain legally responsible on the mortgage unless the loan is refinanced.
The divorce court cannot require the mortgage company to remove one spouse from the loan simply because the divorce decree says so.
For that reason, divorce decrees often require the spouse keeping the home to refinance the mortgage into his or her own name within a specified period of time.
If refinancing is not possible, the home may ultimately need to be sold.
Sometimes the Home Must Be Sold
In many divorces, selling the residence is the most practical solution.
After the mortgage, realtor commissions, closing costs, taxes, and other expenses are paid, the remaining proceeds are divided according to the parties’ agreement or the court’s final judgment.
Selling the home often allows both parties to begin the next stage of their lives without remaining financially connected through jointly owned real estate.
Temporary Orders May Determine Who Lives
in the Home
One of the spouses frequently remains in the marital residence while the divorce is pending.
Temporary orders may award one spouse the exclusive temporary use of the home until the divorce is finalized. This does not determine who will ultimately receive the house in the Final Decree of Divorce.
Instead, temporary orders are designed to preserve stability while the case is pending.
The Children Do Not Automatically Stay in the House
Many parents believe the parent awarded the right to designate the child’s primary residence automatically receives the marital home.
Texas law creates no such presumption.
Although the children’s stability is certainly an important consideration, the court must also consider the overall property division, each party’s financial circumstances, mortgage affordability, available equity, and the practical ability of a spouse to maintain the residence after the divorce.
Every family presents different financial circumstances.
Fergus & Tomanka Helps Clients Protect Their Largest Investment
The marital residence is often the most valuable asset involved in a Texas divorce. Determining whether the home is separate or community property, establishing its fair market value, calculating equity, evaluating reimbursement claims, and negotiating refinancing or sale all require careful legal and financial analysis.
At Fergus & Tomanka, we represent clients throughout Central Texas in divorces involving complex property division, real estate, reimbursement claims, appraisals, retirement accounts, business interests, and high-value marital estates. We work to ensure that our clients understand their options and that the division of the marital residence is handled fairly and in accordance with Texas law.
Call (512) 291-6952 to setup a consultation with one of our attorneys OR simply Make An Appointment on your own!
These issues can be quite difficult to handle on your own due to the legal complexity and emotionally-charged nature of the proceedings. It’s best to consult with an experienced family law attorney in your area.