During a divorce, couples must divide the assets acquired during the marriage. Many spouses share enough assets that outside mediation is needed. Who maintains home ownership is among the most common disputes.
Use this guide to learn more about the divorce process and how Texas handles the equal division of property assets. We’ll also review the options for dividing the marital home during a divorce. Selling to a cash buyer is one option that ensures both people can afford a new home, and is a popular alternative to arguing who gets the house in a divorce.
Divorce Process and Division of Property
Divorce requires spouses to divide their assets, including real estate. Because real estate is one of the most valuable assets a couple may own, it often leads to frequent disputes. How real estate assets are divided usually depends on state laws. Understanding family law expectations in your state is important when navigating a divorce.
Community Property vs. Separate Property
The division of real estate assets depends on the property type and state laws, specifically on community vs. separate property. Community property is real estate or other assets acquired during the marriage. Separate property is assets or property acquired before marriage. Inherited or gifted assets may also be considered separate property.
Texas specifically practices community property laws, which means that both spouses equally own any property or asset acquired during marriage. This also means that each spouse is equally entitled to marital assets, regardless of how they were acquired, as long as it occurred during marriage.
Equitable Distribution of Marital Property in Divorce
Most courts use an equitable division of assets when assigning community property following a filing. This means the courts must equally distribute assets between spouses, usually 50/50. However, because a single residence can’t be split in half, disputes often arise about who gets to keep it.
Options for Keeping the House
One spouse who wants to keep ownership of the house may have a few options, even in a community property state with equitable distribution rules. Here are a few options to keep the house.
Buyout
Following a divorce, one spouse may buy out the other. This means that a spouse purchases the home equity from the former spouse, allowing them to maintain full ownership of the house.
This process requires an appraisal, which helps determine the property’s market value during the divorce. A professional appraiser, inspector, and real estate agent can provide divorcing couples with valuable data, including understanding appraisal value vs. market value, to help calculate a fair market value.
The real estate agent may use a comparative market analysis to calculate how much the home would sell for in the current market. This information can help divorcing couples agree on a fair buyout price.
The spouse buying total equity in the property may need to qualify for financing to pay off the other spouse. In return, they may be left with higher mortgage payments. Refinancing the existing mortgage may also be an option for some buyers.
After agreeing on a buyout price and completing the appropriate house title transfer, one person owns the property going forward and is responsible for all costs, including real estate taxes and the mortgage.
Continuing Co-Ownership
Some couples may choose to maintain co-ownership despite being divorced. One spouse may reside in the house even when spouses co-own the property. Yet, both are responsible for the existing mortgage and other expenses.
The spouse living in the home is usually responsible for the mortgage payments and repairs. However, this agreement may not work for everyone, especially in non-amicable divorces.
Additionally, ex-spouses may disagree on important decisions, such as when to refinance or sell the home. Maintaining co-ownership of the marital estate also keeps existing debt, sometimes making it more difficult for the former spouse to purchase a new home.
Selling the House and Dividing the Proceeds
Divorcing spouses may also decide to sell the home and split the proceeds. This may be the only option when spouses cannot agree on who gets to keep the house. Selling may also make sense when neither party has enough income to cover the mortgage payments alone.
Factors Affecting the Decision
Deciding what to do with the family home may be one of the biggest divorcing decisions. Here are a few important considerations that may affect your decision.
Financial Considerations
As with any big financial decision, it’s important to consider your financial obligations. As the sole owner, the spouse who keeps the house will have to cover the home’s monthly payments and maintenance costs. This includes insurance, property taxes, major repairs, and any other financial obligations they may have.
Emotional Attachment
Some homeowners may have an emotional attachment to the house. It may be where the family raised their children. In divorces involving minor children, the parties may want to keep them in the same school district. Emotional attachments can significantly influence who keeps the house in a divorce.
Children and Custody Arrangements
Many divorce proceedings also include child custody agreements, which can further influence a spouse’s decision to keep the house in a divorce. The spouse with primary parental rights may want to keep the house with which their children are familiar. A spouse ordered to pay child support also may not have enough income to afford that and the home.
Long-Term Goals
It can also be helpful to consider long-term goals when determining which spouse should keep the marital home. Each spouse should evaluate their financial goals and how maintaining the specific marital asset fits into them. A divorce can affect a person’s financial stability and may make it difficult to afford a mortgage payment.
Legal and Practical Steps
Deciding who gets to keep the marital home in a divorce is largely a legal decision. Here are a few tips to help with the legal process of dividing the house and other marital assets.
Consulting with a Divorce Attorney and Certified Divorce Financial Analyst
Generally speaking, it’s always a good idea to consult with a divorce attorney or certified financial analyst when dividing real estate and other assets in a divorce. Informed decisions allow each spouse to carefully plan their futures and determine how the marital home may or may not fit in with it.
Deciding what to do with the marital home is a critical financial decision that can have short—and long-term consequences. Working with a financial advisor can also help ensure the decision makes financial sense for both parties. Experts can also provide couples with alternative solutions, which can help avoid court and protect each party’s interests.
Negotiation and Mediation
Negotiation and mediation are standard during divorce proceedings. Each spouse may negotiate until they can agree on a division that works for everyone. In mediation, a neutral, third-party mediator provides divorcing couples with solutions, aiming for a strategy that all parties agree on.
The mediator helps protect each spouse’s interest in the divorce. Working with a negotiator may make more sense in many divorces than going right to a court proceeding.
Court Orders and Property Division
Sometimes, if spouses cannot agree, it may be necessary to involve the courts. The local courts can assist divorcing couples with issues such as determining the total value of a home sale, deciding how much equity each spouse holds, and determining how much the residing spouse should pay the other spouse.
The court may also issue a temporary order granting homeownership access to only one party or spouse. However, this is usually temporary and will require further negotiation, mediation, or a legal proceeding.
Selling a House to a Cash Home Buyer
Selling to a cash buyer can solve many issues with spousal disputes during a divorce. Working with a cash buyer removes the need for financing contingencies, which can slow down the sales process.
Also, the couple doesn’t need to show the home, make repairs, or undergo lengthy appraisals or inspections with a cash buyer. This lets the couple focus on the divorce and offload the home for a clean break.
Benefits for Divorcing Couples
Whether only one spouse wants to maintain homeownership or neither spouse can agree on who gets the home in a divorce, equally distributing real estate assets can be complex. Home equity is important when divorcing and helps couples determine what each spouse’s share is worth.
However, specific challenges can slow the process even when one person is willing to pay for the other spouse’s interest. The alternative, shared equity, ties one spouse to their former partner for many years.
Regarding divorce, a cash sale may be the best option for a clean break. Selling your house to a cash buyer provides each spouse with quick funds, which can help facilitate divorce costs. Offloading your house faster also means paying off your mortgage, which can help with legal fees and finding new residences.
Contact A-List Properties at (972) 526-7042 to sell your home for cash. You can also use our online form to receive a fast cash offer.
Zach Shelley
Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.
