With the ever-evolving nature of the real estate industry, the home that you own is often the largest asset in a Stone Oak divorce. But it can also be a gamble on how to handle this asset in divorce. Being familiar with how Texas law addresses this asset can help you understand what your options are going forward.
Comparing options for the house
State law generally presumes that a home is community property when either spouse acquires it during marriage, even if the deed lists only one name, unless evidence establishes separate ownership of all or part of the house. Courts divide the community estate in a just and right manner, which does not always mean an equal split.
Selling the home ends joint ownership, but the outstanding loan balance, closing costs and other expenses reduce the proceeds available for distribution. A buyout can allow you to keep the home while paying your former spouse for their share of the equity, often through cash, an offsetting asset award or financing.
Continuing to own the house together delays a clean financial separation and requires clear terms for mortgage payments, upkeep and a future sale. If both parties sign the loan, its terms continue to bind each of them until they pay it off, refinance it or obtain a formal release from the lender.
Financing a spousal buyout
Keeping the home may depend on whether you can qualify for a refinance on one income. A lender reviews your earnings, credit and monthly debts, including the new mortgage payment, property taxes and insurance. Beyond loan approval, you must decide whether that payment and ongoing maintenance fit within your post-divorce budget.
When the buyout cannot occur immediately, the decree may grant the departing spouse an owelty lien to secure the amount due. The order can set a deadline or tie payment to a sale or refinance. Until the homeowner satisfies the obligation, the lien gives the other party a claim against the property.
Tracing separate property claims
Property you acquired before marriage generally remains separate, but you must prove that status with clear and convincing evidence. A deed or closing statement can establish when the transaction occurred. Bank records may also trace premarital savings into a later down payment.
Tracing addresses ownership, while reimbursement concerns a financial benefit that one marital estate provided to another. If community earnings reduced the principal on a separate-property mortgage or paid for capital improvements to the home, the community estate may seek repayment.
Because tracing and reimbursement require different proof, organizing the supporting documentation early can clarify the claim you can present. The Barrera Firm can review deeds, closing statements, bank records and improvement receipts to determine whether the facts support separate ownership, reimbursement or both.