What Happens to the Family Home in a Divorce?
Property division is one of the most important aspects of divorce, as well as one of the most contentious. When spouses must decide how to equally split assets and debts acquired during the course of the marriage, there are a number of things to consider and a number of possibilities for a resolution. This is especially true when determining what happens to the family home in a divorce. .
If you are contemplating divorce and are concerned about what happens to your assets, including real property, skilled legal representation becomes critical to protecting your rights and best interests. At Hendershot, Cannon & Hisey, P.C., our Houston family law attorneys provide focused advocacy during all phases of divorce, including those involving high net worth and complex property division. This includes counseling our clients about their rights and options when it comes to the family home.
Community Property vs. Separate Property
In Texas, assets owned by the spouses are presumed to be community property. Income, property, and debts earned during the course of the marriage are owned by both spouses and must be split equitably upon divorce. Texas calls for equitable distribution of property in divorce, but in many divorce litigation, the heart of the property division is what happens to the marital residence.
If your family home was purchased during your marriage, then it is likely subject to property division. A family home is separate property and not subject to division if:
- It was acquired by one spouse prior to the marriage; or
- It was received as a gift or inheritance during the marriage.
Unfortunately, the characterization of a marital residence is always that straightforward, especially if the following applies:
- Deeded in both names – Even if a home was purchased by one spouse prior to date of marriage and was later deeded to both spouses after marriage, such as during a refinance, it may still be considered separate property. To muddle it further, the Court may consider that refinancing and deeding a house to both the parties’ name to be an act of gift from one spouse to another. Accordingly, this could become jointly owned separate property home.
- Mortgage payments – If both spouses contributed to paying the mortgage of a family home acquired by one spouse before marriage, the community estate has reimbursement claim against the owner spouse's separate property for paying down the principal amount of the mortgage. Likely, it is worthy to note that the community estate may have reimbursement claim against the owner’s separate property for improvement to the separate property house.
Family Homes as Community Property
When a family home is community property, it will be subject to property division. As such, you and your spouse have the right to reach an agreement regarding what becomes of the family home. Because homes are often the largest asset owned by married couples, and because they serves as the center of family life and an emotional anchor for children, reaching an agreement is not always an simple matter. Your situation and your goals are major factors in what happens to the home, as is your willingness to compromise. Working with an attorney who can protect your interests during settlement negotiations is critical to protecting your interests and reaching a mutually agreeable outcome.
If you and your spouse cannot arrive at an agreement over a community property home, the Court will make a determination based on the individual facts of a case and the evidence you and your attorney provide in litigation. There are several possible ways a court may determine the fate of the family home:
- Have one spouse buy out the other’s share
- Award one spouse possession of the home for a limited time, such as when minor children are involved, and require both spouses to sell it by a certain date
- Have both spouses immediately sell the home and divide proceeds per court orders
- Awarding the house to one party and offset the value of the home by awarding other assets to the other spouse
Whether spouses reach an agreement and settlement or leave matters up to the court, there are generally two outcomes for their community property home:
- One spouse remains – If one party is able to make payments on their own and wishes to live in the family home, then that party can be awarded the marital residence. In such case, the recipient can refinance the loan in his/her own name. However, this is not realistic for many couples, so the tool to award a real estate to one party is by having non-recipient party to sign special warranty deed and the recipient party a deed of trust to secure assumption. The legal effect of such is that if the recipient fails to comply with the mortgage terms, the non-recipient will have the right to foreclose on the house.
- Sell and split equity – If neither party wishes to remain in the family home, or neither party can afford the home on their own, it can be sold and the net proceeds split according to the agreement reached in a divorce settlement, or in accordance to the court’s order. Facilitating such an agreement is a case-by-case matter that can benefit from the assistance of an experienced attorney.
There are many other considerations regarding what happens to the family home. Depending on the individual factors, there are a number of other approaches that parties can take during a divorce with regards to the family home.
Protecting Your Rights and Interests
With decades of combined experience handling divorce cases, our legal team has the insight and resources to protect your rights and interests during all matters of property division. This includes tailored counsel in cases where settlements are obtained through mediation, collaborative law, or an uncontested divorce, as well as litigation to protect you against unjust results.
If you would like more information about property division, divorce, and how Hendershot, Cannon & Hisey, P.C. can help you, call (713) 909-7323 to request an initial consultation.