What Happens to the Family Home in a Divorce?

 Texas is a community property state, so if you are contemplating a divorce or in the middle of one, you should be aware of what this entails and the effect on your property division. When two people enter a marriage, a community estate is created. This means that most of their property, assets, and debts acquired during the marriage are presumed to be assets and debts of the community estate. Conversely, there can be assets or debts that are characterized as separate property of either spouse. Separate property is generally considered to be property that was acquired before the marriage or was received as a gift or through inheritance.

Some common examples of community property are bank accounts, credit cards, real estate, retirement accounts, and vehicles that spouses acquire during marriage. More specifically, your family home will likely be characterized as community property if the property was purchased after the date of marriage and the funds used to purchase and maintain the home were earned during the marriage as well. If both elements are true, then the home is subject to fair and equitable division at the time of divorce.

It is important to clearly establish when the home was purchased as well as where the funds came from to purchase the home. If monies earned or received prior to marriage were used, then the party who utilized those separate property funds could assert an equitable claim of reimbursement against the community estate to recapture those dollars. If the home was purchased before marriage, but was maintained by the parties after marriage, the spouse who did not take part in purchase could, likewise, assert a reimbursement claim against the other spouse’s separate estate on behalf of the community to ensure appropriate credit is given to the community estate for mortgage, taxes, and insurance payments (among other things) on one spouse’s separate property. However, pursuing a reimbursement claim is not always a simple exercise and requires that the party making the claim have sufficient proof to trace the money, in reverse, such as settlement statements, closing documents, and bank records.

If the Court weighs all the evidence and determines that the property is clearly and convincingly characterized as separate property, then the property itself is not subject to division in divorce, leaving only the reimbursement claim as the method by which the community estate can receive fair credit. But if the property is determined to be community property, you will have to come to an agreement as to how the family home should be divided, or leave the fate of your home in the Judge’s hands

Dividing property can be a difficult, and often emotional, aspect of divorce. Every family is different. There is no singular “correct” answer on how to divide the family home in divorce. Your family’s needs and your financial situation will impact how you deal with the disposition of the family home.

 Some common solutions you can consider are:

1.      Selling the home and dividing the proceeds equally.

2.      Having one party buy out the other’s share of net equity (i.e., fair market value as determined by an independent appraiser less mortgage indebtedness and other liens).

3.      Continuing to own the property jointly.

4.      Letting one party retain ownership in exchange for other divisible assets.

It is most common for both parties to sell all real estate and divide the proceeds as purchasing the other party’s interest can be expensive and unrealistic for many situations. It is important to consider the pros and cons of each option, considering your family’s circumstances. Many times, the parties wish to continue to raise their children in the family home and later sell the property after the kids have finished high school. But this option, if implemented, means you will need to remain in contact with your ex, work together to maintain the property and ensure that the mortgage and other expenses associated with the property are timely taken care of. This is especially difficult with a high-conflict divorce or if you have trouble communicating effectively and respectfully with your ex.

Additionally, maintaining a financial connection with your ex after divorce could have a negative impact on your credit score. For example, your mortgage debt will appear on both of your credit reports if you are both named on the note. Also, if the party who retains ownership of the property post-divorce fails to make mortgage payments, it can negatively affect the other party’s credit score, limiting that party’s ability to secure and purchase a home of their own. Similarly, if one party files for bankruptcy, the bank and creditors may be able to seize that property in the process.

No matter how you choose to deal with your family home in divorce, it is important that the terms and obligations are carefully and specifically defined. Utilizing experienced legal representation to accomplish this is highly advisable and the attorneys at Jenkins & Kamin, LLP are prepared to serve you.

Jenkins & Kamin LLP is one of the most respected family law firms in Texas. The firm is noted for its “team” approach by pairing skilled attorneys, paralegals, and other support staff with clients to assist them during difficult life transitions.

In addition to the “team” approach, Jenkins & Kamin, LLP strives to personalize case strategies for each client, including identification of every legal issue and effective explanation of the law with respect to those issues.  The firm endeavors to achieve a resolution that is appropriate for each client, while aggressively advocating on their behalf when necessary. Having a dedicated and experienced team working with you in any family law matter is of utmost importance to achieve the best result possible.

Jenkins & Kamin LLP represents clients in the following aspects of family law practice: Marital Property Agreements, Divorce, Complex Property Issues, Child Custody & Visitation, Child Support, Parentage, Modifications, Family Law Appeals and Dispute Resolution Alternatives. To learn more about the firm, visit http://www.jenkinskamin.com or contact one of our offices in the greater Houston area.