For Texas couples who are ending their marriage, dividing a house that was bought together can become a major point of contention. In many cases, the home is sold and the funds divided. Most commonly, though, one spouse buys out the other’s share in the home. This may sound straightforward, but the process can be different depending on the stage of the divorce. For those who are not yet divorced or separated, it’s possible for one member of the couple to buy a personal home, but the other party would need to sign a quitclaim deed relinquishing any community property interest in the new home.
In some buyout cases, it becomes necessary to refinance in order to buy out the former spouse’s share in the house. Gift funds, which may come from family or close friends also may be used to buy out a spouse’s share.
Perhaps the biggest challenge comes from being tied to a mortgage that has been taken over by a former spouse. To a lender, both names are on the mortgage, so if the former spouse does not make timely payments, that will affect both parties’ credit ratings. In order to avoid this predicament, it’s best for the former spouse who has taken over the mortgage to refinance and only have his or her name on the new mortgage.
For those who are going through divorce, figuring out how to deal with a jointly-owned home can be difficult. An attorney with experience in divorce and other family law matters may be invaluable in helping a client arrive at a negotiated agreement.
Source: FOX Business, “How to Divide Your House in a Divorce“, July 14, 2014