Texas is a community property state. Community property is made up of all property (real estate, automobiles, stocks, 401k accounts, bonds, etc.) obtained by each partner during the marriage. Real estate that is owned by one spouse at the time of the divorce is considered to be community property (unless a spouse can prove otherwise with unmistakable evidence).
Couples filing a divorce in Texas may have difficulty dividing the marital home or residence. Due the economic downturn and the current housing market, couples may have very little or no equity in their home. This can make it difficult to find an equitable settlement for the partners in the divorce, and if both spouses have their names on the mortgage it may be difficult for either spouse to re-finance the house into their own name. Lenders may also be hesitant to discharge one spouse from the legal responsibility of paying for the mortgage.
Many times, either the husband or wife will be in charge of making the mortgage payments. This action makes them the owner, and they cover the other spouse against any claims made by the lender until the property is sold or the mortgage is remunerated. The other spouse becomes the lien holder, but they are down the list behind the lender and other creditors. The lien holder partner has to trust that the owner partner will keep on making mortgage payments after the divorce. If they cannot make the full payment each month, the lien holder partner must be able to step in and make those payments to avoid the house going into foreclosure. This can be a precarious situation.
On the other hand, if the marital property is worth more than the outstanding balance, or has equity, the problem of division is much easier. If one spouse really desires to live in the marriage residence, a deal may be reached allowing that spouse to keep the house and a smaller percentage of the remaining community property.
Even when both spouses are in agreement about a divorce and there are no differences of opinion about separating community property, it may be best to consult with a divorce attorney so you can avoid pitfalls and potential financial catastrophe when deciding how to handle the marital residence.
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