By Teresa Sanchez, Managing Attorney of the Family Law Department
Who gets the house? is one of the most common questions asked in divorce proceedings. This blog looks at key factors Texas courts look at in deciding the fate of the family home. Please be mindful this blog is not a comprehensive guide so not every possible scenario is covered.
Was the House Bought Before or During the Marriage?
Bought Before the Marriage: If the house was bought before the parties married, then it is not part of the divorce proceeding. It is not community property because it was not bought during the parties’ marriage. It would be classified as the separate property of the party who owned it prior to marriage and not subject to division by the court in a divorce.
Bought During the Marriage (Both Spouses on Mortgage): If the house was bought during the marriage, then it is community property and subject to division in a divorce proceeding. If the parties cannot reach an agreement on this informally or at mediation, the Court will make a fair and equitable determination regarding disposition of the house, with the goal of achieving a just and right division. To do so, the Court will decide the percentage of the net proceeds that each party is to receive when the house is sold or refinanced, or when an equity loan is taken out.
If one party wishes to force the sale of a house, in order to avoid owning it with their ex after divorce, that party must file a Suit for Partition. Depending on the county, the Suit for Partition may be filed in a different court or different courthouse altogether.
Bought During Marriage but Only One Spouse Is on the Mortgage: If the house was bought during the marriage, it is community property and will be divided as such unless separate property agreements were entered into both between the parties and between the purchasing party and the lending institution. This is rarely done. In most cases, when only one spouse is on the mortgage, the purchasing party will try to bully the non-purchasing party into believing they’re entitled to nothing. Usually, that is absolutely false.
Sell, Refinance, Equity Loan?
There are three main tools a court will use to dispose of a house in a divorce matter short of appointing a receiver to take control of the property. The tools are sell, refinance, and equity loan.
Sell: If the court orders the house sold, then the judge will do the following, unless the parties can reach agreement between themselves:
- appoint a broker
- set a date certain by which the house must be listed
- set parameters for the list price and sale of the house
- determine who will pay the mortgage, taxes, and insurance until the sale closes
- determine who will remain in the house until closing
- determine who is responsible for the upkeep of the house until closing, including payment of the utilities
- determine the percentage of the net proceeds to be awarded to each party at closing
Refinance or Equity Loan: It is not uncommon for one party to want to remain in the house after the divorce with the other party wanting their portion of the equity sooner rather than later. In such situations, either the mortgage must be refinanced or a home equity loan taken out. There are myriad factors for a party to consider before embarking on this course of action, and working with an experienced family law lawyer can make the difference between an informed decision and an emotional one.
The judge will set a number of time frames: 1) when the clock starts to run to refinance, 2) how long a party has to refinance, and 3) when the other party must be paid their portion. A common roadblock will be current interest rates or the lack of funds to buy down points to lower the interest rate.
Putting the House in Receivership
It’s important for the court’s decree regarding the house to include the appropriate language for appointment of a receiver. Having receivership language in the decree makes it easier for the court to appoint one should the need arise. Appointing a receiver is usually a last resort for the court to dispose of real property in the parties’ community estate.
Assuming receivership is an option for the court, these are the most likely scenarios for an appointment:
- when the former spouses cannot agree on the terms of sale
- when a sales price cannot be agreed upon
- when a real estate broker cannot be agreed upon
- when a former spouse refuses to list the house for sale
- when a former spouse is unable to refinance as originally thought
It is important for the client to understand what a receivership does and does not do. Speaking with a competent family law attorney is important to understanding Who gets the house?
Call Us Today
If you find yourself asking Who gets the house? consider giving us a call to schedule an appointment with one of our family law attorneys. We look forward to speaking with you soon.
