Community vs Separate Property

Texas generally divides a divorcing couple’s property into two basic categories: community property and separate property. Under property division laws, individuals can retain separate property pursuant to a divorce. This might include property owned before the union, property that was a personal gift, or an inheritance to one party during the union. Once a separate property is accounted for, the court will divide the community property of the marriage among parties in a fair way. In allocating this division, the court might contemplate several factors, including business opportunities, education, age, income, and the parties’ earning capacities.

What Happens to the Marital Home When One Spouse Owned the Home Prior to the Marriage?

Divorce and house equity may be more complex depending on when the home was initially purchased, and by whom. If a spouse owned the family’s residence before the marriage, the value of equity at the beginning of the marriage is considered the owner’s property. However, once the marriage continues, additional equity that accrues creates an equitable claim for reimbursement upon divorce under Texas law. The philosophy is that the couple utilizes community dollars that accrue during the marriage to pay down the separate property mortgage during the relationship. As a result, the community estate has expended funds to its detriment, which benefits the different estates of the property owner.

Texas courts can consider this at the time of divorce by ordering the spouse with the separate estate to reimburse the community estate for those expenditures.

What Happens to the Marital Home if the Couple Mutually Holds Ownership of the Home?

Before starting the process, many wonder how home equity works in a divorce under Texas Law. Texas utilizes the community property model for divorce. This means if the house was purchased during the marriage using 100% community funds, assuming community equity exists at the time of divorce, the first step in splitting home equity would be to obtain an accurate evaluation of the home’s worth. The clearest indicator of a property’s value is the price that a willing buyer will pay. However, if neither side wants to sell the house, you must determine how to split home equity in a divorce. You can calculate an estimate of the property’s fair market value can be achieved through a formal appraisal. Many realtors also provide informal market assessments, which can give parties an estimate of the home’s value. However, an official appraisal is more accurate.

When it comes to divorce and house equity, there are several options for apportioning the equity on the home once the property’s market value is determined. If neither party desires to keep the home, dividing the equity proportionately after a sale could work. However, there are several other important considerations. For example:

• Who will pay the mortgage, insurance, and taxes while the sale is pending?
• Who will cover upkeep expenses?

Moreover, will someone remain in the home pending the sale? These issues could affect a fair division of home equity.

If a spouse wants to retain the home, the remaining spouse can compensate the other party by forfeiting other community assets in the property division pool. In this case, the party not staying in residence may get a more significant fraction of the other assets or contribute less to the parties’ outstanding debt.

Ultimately, obtaining a correct market assessment of a residence is step one in the property settlement process. If you want to decipher how your property division process might unfold, contact an experienced family law attorney at Goranson Bain Ausley.

A Goranson Bain Ausley Divorce Attorney Proficient in Property Issues Can Help

If you have questions about how to divide the marital home or are facing separate property issues in a divorce, hire an attorney who can capably manage the property aspects of a divorce and has expertise in characterizing, valuing, and tracing property. Without the guidance and assistance of a skilled lawyer, your separate property can be lost, in whole or in part, to your spouse in the divorce.

With decades of experience, Goranson Bain Ausley attorneys have successfully resolved property issues for many clients—including both contested and uncontested divorces, high net worth and those with complex and less complex property matters. We are well-versed in the nuances and complexities of property matters, especially preparing cost/benefit analyses to help you decide which separate property claims to pursue.

When advantageous, our lawyers will recommend adding an independent forensic accountant to the team to perform complicated tracing and strengthen your case. Establishing your separate property is key to a durable settlement that enables you to retain essential assets for life after divorce. Rely on a Goranson Bain Ausley attorney to protect and secure your property rights.

• Thomas P. Goranson 1997
• Thomas L. Ausley 1997
• Diana S. Friedman 1998
• Thomas A. Greenwald 2003
• Kathryn J. Murphy 2004
• Eric Robertson 2007
• Kelly Ausley-Flores 2009
• Aimee Pingenot Key 2015
• Kristen A. Algert 2017
• P. Lindley Bain 2020
• Ryan R. Bauerle 2022
• Lindsey Obenhaus 2023

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• Diana S. Friedman 2017 2016 2015 2013
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• Thomas P. Goranson 2011 2009 2008
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• Thomas L. Ausley 1980
• Thomas P. Goranson 1980
• Gary L. Nickelson 1984
• Paula Larsen 1985
• Angeline Lindley Bain 1993
• Kathryn J. Murphy 1995
• Diana S. Friedman 1996
• Kristen A. Algert 1997
• Thomas A. Greenwald 1997
• Eric Robertson 1997
• Kelly Ausley-Flores 2000
• Curtis W. Harrison 2002
• Cindy V. Tisdale 2003
• Jeff Shore 2006
• Clint Westhoff 2006
• Jeff Domen 2009
• Angel J. Berbarie 2010
• P. Lindley Bain 2012
• Aimee Pingenot Key 2012
• Kevin Davidson 2017
• Rob Frazer 2018
• Ryan R. Bauerle 2018
• Hayley Collins Blair 2019
• Lindsey Obenhaus 2019
• Katie Flowers Samler 2019
• Jonathan James 2020
• Chris Nickelson 2021
• Chandler Rice Winslow 2023