How do you divide the marital home in a divorce?

This page is part of our digital course, Texas Divorce Law Essentials Every Woman Needs to Know.

Module 2: House Rules

What are some general concepts to keep in mind?

If your house was bought during the marriage, the house is probably community property and the equity in the house should be divided in the divorce. It does not matter if only one of you is on the house title or both of you are. Even if only one of you is on the house title, a community property house belongs to both of you. There are two main issues to consider when dividing the house. The first is determining the value of the house, and the second is determining if we need to remove someone from the mortgage. There is also a third, less common issue that comes up, which is separate property reimbursements.

How do we value our house? 

If one of you is keeping the house, then we need to determine its value. If the house is being sold, then the value is less important, as the value will be determined once it’s sold. However, if one of you wants to keep the house and just pay the other person his or her share of the equity, then we can hire an appraiser, look at realtor comps, or average values from online websites. We generally avoid tax district appraisals, as they are not usually accurate for purposes of a divorce. And keep in mind that the person keeping the house will want a lower value and the person wanting to be bought out will want a higher value, so this is where disagreements can arise. If you and your spouse can’t agree on the value, we go to court and let the judge decide.

How do we get off the mortgage?

If there is a mortgage or other lien on the house, then we look at who is obligated on the debt. If you are both obligated on the debt, and one of you wants to keep the house, then we need to figure out how to remove the person who is leaving from the debt obligation. There are three ways to remove someone from the mortgage: sell the house, pay off the loan through another loan or refinancing into one person’s name, or assume the mortgage from the bank.

Why can’t we just stay on the mortgage together?   

We do not usually recommend staying on the mortgage together after the divorce. The reason you do not want to remain on the debt if you are not keeping the house is to protect your credit. If your soon-to-be ex fails to make a mortgage payment or dies and defaults on the loan, a foreclosure will drastically impact your credit. And even if you trust your spouse to make the payments, the debt obligation itself will be reflected in the debt column of your credit, which will affect your ability to purchase a house in the future, as well as impact the interest rates you get for credit cards, car loans, and other credit applications.

How do we know if refinancing is an option?

If one of you wants to keep the house by refinancing the mortgage, then we advise starting the prequalification process early. You should speak with a mortgage lender about your options. Note that the bank lender is not your only option. Some mortgage lenders are certified divorce lending specialists, and they can make sure the drafting of the final order will comply with their underwriting requirements. Keep in mind that the actual refinancing can’t happen until after a final order is signed by the Court, but getting prequalified will help you and your attorney understand the limitations of the refinancing and what needs to be negotiated to make it happen. This is especially helpful if you are a stay-at-home mom who wants to keep the house, or for anyone prior to mediation.

What if we used separate property or gifted money on the house?

One issue that comes up when dividing the house is separate property contributions. The usual scenarios we see are when one spouse brings pre-marriage money into the marriage or when parents gift money to the couple, and those separate property funds are used to pay the down payment, make mortgage payments, or for home improvements. These situations complicate the division because, if proven, a separate property contribution would be taken out of the overall equity value and reduce the community estate to be divided.

Can we live together until the divorce is final?

That depends. Generally, there is no legal reason you can’t live together while your divorce is pending. Afterall, living together for as long as possible can help you save money during a potentially expensive divorce process, or help minimize the stress on your children. However, we want to be sure that doing so does not impact you negatively. For example, if there is domestic violence or extreme abusive behavior, we may advise that one of you moves out. And if child custody is an issue, staying in the house may be necessary to protect your rights to the children. You and your spouse can discuss whether you want to continue living together or who will move out. If you can’t agree, then we must go to court and ask the judge to decide.

Course Navigation:

• Revisit Module 2: Property and Debts
• Continue to Module 3: Custody, Visitation, and Child Support – Coming Soon!