La Marque, TX asked in Divorce for Texas

Q: In the state of Texas if a husband owns a home prior to marriage and at some point refinances the home does ownership?

Wife & I have been married 9 years 9 months we I have filed for divorce. I owned 3 homes 2 with Mortgages 1 without, when we meet she owned 1 home with a mortgage. we sold all the homes at some point and kept the one home in which I had lived 12 yrs previously. She thinks that she is intitled to 1/2 the fair market value of this home. I think she is entitled to 1/2 the equity paid to the home during the 117 months. To make it more difficult she also did a second refinance and rolled another home had had bought together into a new not on my home and paid off the mortgage on the home in Indiana in which we still own. Advise please.

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1 Lawyer Answer
Jennifer S. Hargrave
Jennifer S. Hargrave
  • Dallas, TX
  • Licensed in Texas

A: In general, the character (i.e., whether it is community property subject to division or separate property) is determined by your marital status when you acquired the asset, also known as "inception of title rule." Since you were single when you bought the marital residence, it sounds like it is your separate property. There are of course exceptions - such as if you "gifted" her an interest in your separate property (i.e., you put her name on the warranty deed with the intent to give her half of the house).

In Texas, our family code does provide for a reimbursement claim when one estate has benefited by the actions of another estate. When the community property estate has been paying the debt owed on the separate property real estate, the community property estate is entitled to reimbursement claim for the reduction in principal on the mortgage (note that it is only for the reduction in principal, not the full amount of the mortgage payment each month which often includes interest, insurance and property taxes).

For example, you purchase a house before marriage for $120,000. You have a $100,000 mortgage on the property when you get married. When you get divorced ten years later, the house is now worth $300,000, and the mortgage is $75,000. The value of the equity in the house at $225,000 ($300,000 minus the mortgage of $75,000) is your separate property. However the community property estate is entitled to a reimbursement claim of $25,000 ($100,000 mortgage minus $75,000 outstanding principal). Her one-half of that reimbursement claim would be $12,500.

There are always issues that can further complicate the matters, and to get specific advice on your situation, you will need to have a lawyer review your loan refinance history, the underlying real estate records (Deeds of Trust, and Warranty Deed), and advise you regarding any specific claims that may be made against your separate property asset.

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