Division Of Real Estate
Of all the real estate issues that come up in the course of a Dallas divorce, the division of real property can be one of the most difficult and emotionally charged.
Texas is a community property state, and that creates a presumption that all property acquired during the course of a marriage, regardless of which spouse holds the title, is community property of both spouses in equal measure. This rule comes with significant challenges in determining how this property is to be divided, and it includes real estate acquired during the marriage.
However, not all real estate is community property. Property acquired prior to marriage, with separate property funds, or obtained during marriage as the gift of, or inheritance from, a third party is considered separate property. Therefore, in any divorce involving real estate, the first critical step is to understand if that real estate is community or separate property.
For most couples, their house is the single biggest asset they have. There are cases where deciding what happens to the house poses a big challenge, more so when children are involved. Other factors that the court will consider include the best interest of the children, the financial condition of each spouse, and the nature of the property itself. One spouse may purchase the other’s interest in the home if both parties agree. The house may be sold, and the proceeds will be divided between the parties. Or a court could award the property to one party—subject to a lien or judgment.
It is important to know that Texas courts have a wide latitude of discretion when it comes to division of property in a divorce. While Texas is a community property state, this simply means that real estate and other assets are not automatically divided 50/50. Instead, the court considers what is “just and right,” which may not be equal in all cases.
Another consideration for home division is the mortgage. The court may dictate that one spouse refinance a loan in his or her name alone. If they are unable to refinance, the house could be sold so that neither party remains financially obligated to the property. However, if one spouse retains the home, then that spouse should feel confident in being able to pay the mortgage without contributions from the other spouse.
Investment Properties
Property distribution can also be much more complex with investment properties, second homes, or real estate held through a business. The court may have to decide on the exact value of such properties and then how they need to be divided. If you have real estate that is linked to a business, things get really tricky, as the value of the property will often be assessed as a part or asset of the business itself.
Finally, there is the important aspect of understanding the tax consequences in the division of real estate. If the house is to be sold, capital gains taxes may become an issue, especially if the house value has significantly appreciated. Additionally, the spouse retaining the home will not enjoy certain tax advantages available to married couples filing jointly. It is important to consult with a CPA or tax attorney regarding the advisability of certain types of agreements.
Because of the complexity of real estate and divorce issues in Dallas, it is important to seek assistance from an attorney experienced in Texas property laws in safeguarding your rights.
Texas Divorce Frequently Asked Questions (FAQs)
What Happens To The Family House Once A Divorce Is Filed?
In Texas, a court looks at a variety of factors including: the best interest of the children, the financial condition of each spouse, and the nature of the property. If a spouse desires to retain the house, that spouse may have to buy out the other spouse’s interest. Alternatively, the house may be sold and the proceeds divided between the parties. The idea is to divide the property in such a way that is just and right under all the circumstances (not always “fair”).
Can The House Be Retained If It Were Community Property?
If you purchased the house during your marriage, it is most likely considered community property. One spouse can keep the house, but subject to “buying out” the other spouse’s interest in it. You may refinance the mortgage, assume the mortgage obligation entirely in your name (if your note allows it), or possibly give up other assets to her/him in exchange for that interest. One who wishes to retain a property must show she will be able to pay the mortgage and related expenses with your own income after a divorce.
What If I Owned The House Before I Got Married?
If you owned the house before you got married, it is typically your separate property. However, if community funds were used in paying the mortgage or in improving the property, then your spouse may have a right to a portion of the home’s value via a reimbursement claim. These are highly specific situations, and focus on the concept of “unjust enrichment.”
How Is The Value Of The House Determined In A Divorce?
Appraisals are what courts most frequently refer to and rely on to find the value of the home. The spouses may hire an appraiser separately, or jointly they can pick a neutral appraiser to estimate the value of the property. The appraised value would then give the court an idea of how to equitably split the home as part of the overall property division, or what a reasonable buyout might look and feel like for one or the other party.
What Happens To A Mortgage After A Divorce?
In instances where a house stays with one ex-spouse, he or she will most probably have to refinance the mortgage in his or her name only (or somehow remove the other ex-spouse from liability surrounding it). In this respect, the other spouse will not bear further financial liability in relation to the property. In a situation where he is unable to refinance, the court may issue an order for the sale of the house, with proceeds to be split.
Do I Have To Sell The House If We Can’t Agree?
If you and your spouse are unable to decide together what to do with the home, then the court may just make an order that the house be sold. The money from that sale would go to the parties according to the judge’s decision about what would be a just and right division of the overall marital estate. However, the sale of a home is usually the very last resort, where no other agreement or order could be done.
What If My Spouse And I Own Several Properties?
Each property you and your spouse own must be analyzed to determine whether it is community property or separate property. After that analysis, the court will issue an order as to how those community properties are to be divided.
Are There Tax Consequences When Selling The House During A Divorce?
Selling the home in divorce may have tax consequences, especially if the appreciation in value of the home has been considerable. One is normally faced with capital gains taxes, especially if you have owned the home for quite a long time. You could also lose certain tax benefits that are associated with a marital filing
What If My Spouse’s Business Owns Real Estate?
This means that if your spouse’s business owns the property, the values of both the business and the property must be determined by the court. This can make the division of property a bit more complicated because the court must look into the business format’s financial aspects and how the property is one piece of that.
Contact Our Dallas Divorce Attorney For exceptional Representation
If you are pursuing a divorce involving real estate in Dallas, getting professional advice from attorneys will definitely help in preserving your rights. At Orsinger, Nelson, Downing & Anderson, we have experience and knowledge that will enable you to understand your options and make informed decisions.
Whether it is the family home, investment properties, or business-related real estate, we can walk you through what can happen—and how to protect your interest. Contact our Dallas divorce attorney at Orsinger, Nelson, Downing & Anderson by calling (214) 273-2400 to schedule a consultation. Our firm has offices in Dallas, Frisco, and San Antonio, Texas, to best serve you.