Once you have hired a licensed real estate appraiser, real estate agent or done a comparable home search on the county appraisal website to determine a likely value for your home, you have done most of the work that is related to value your house for the purpose of selling it. The next thing you to do is consider whether or not you need to remove “incidental” costs associated with the sale of the home from that appraised value.
Incidental costs are things like closing costs and realtor fees. From my experience, these costs are way too speculative to include in the value of the house. Closing costs vary across properties and title companies. There are no specific cases that I am aware of in Texas that say one way or the other how this subject is to be treated. However, I would be willing to argue based on the previous couple points I made that they should not be deducted from the appraised value of the home.
Fair Market Value Is What You Are Going After When Looking For the Value of Your Family Home
Anyone of us who took high school economics is likely familiar with the term “fair market value.” This term can be defined as the amount that would be paid in cash by a willing buyer who desires to buy but is not required to buy, to a willing seller who desires to sell but is no under no necessity of selling.
That definition is one that is pulled from something called the Texas Pattern Jury Charge. There is no mention of realtor charges or closing costs in that definition. Closing costs vary from transaction to transaction. Realtor costs may not even come into being if a realtor is not used or if the house is never actually sold.
Reimbursement Claims and the Family Home
Divorce often brings to the forefront sensitive issues like reimbursement claims, especially when they involve the family home. This topic intertwines deeply with notions of fairness and equity. If you’ve financially contributed to your spouse’s separate property, you’re typically entitled to reimbursement in a divorce. However, quantifying these claims can be complex.
The Texas Family Code doesn’t provide specific guidance for family court judges on calculating reimbursement claims in divorce cases. Judges have the discretion to decide the amount of reimbursement or even whether to recognize the claim at all.
Consider the scenario where you’ve helped pay the mortgage on your spouse’s separate property. To pursue a reimbursement claim, you’ll need to demonstrate how much the mortgage principal was reduced during your marriage. This can be done using mortgage statements from the internet or your lender, which detail the allocation of each payment towards principal, interest, and escrow. Tax returns showing mortgage payments can also be useful.
Another common situation in divorce involves community funds being used for improvements on a separate property home. For example, if you and your spouse jointly financed upgrades to a home you owned before marriage. The claim’s value is tied to the home’s increased value due to these improvements.
Assessing the added value from enhancements like a new kitchen or solar panels isn’t straightforward. Here, a real estate agent’s expertise can be invaluable, potentially serving as an expert witness if the issue arises in court.
In summary, while reimbursement claims in divorce are intricate, understanding the basic principles and preparation can significantly ease the process.
How Can Your Family Home Be Divided in Your Divorce?
There are many options available to a judge when it comes to dividing up your family home in a divorce. Keep in mind that these options are only available to a judge if you and your spouse cannot come to an agreement on your own when it comes to valuing the home and then either dividing it in a sale or allowing one of you to remain in the home while the other has their community property interest bought out.
First Option: Judge Declares Home as Separate Property
The judge actively determines the home as separate property of you or your spouse. This straightforward decision involves no complications. Following this, the judge awards the house to either you or your spouse. In some cases, the judge might award you the house but permit your spouse to live there for a set period post-divorce, especially if your spouse demonstrates difficulty in finding new housing quickly.
Rural Real Estate Partitioning
In rural areas, the judge can partition the real estate. For example, if the judge awards you the home, your spouse might receive the majority of the surrounding land. This compensates for the loss of their community property interest in the residence.
Final Option: Selling the House
The judge may order the sale of the house. After deducting closing costs and realtor fees, you and your spouse will split the remaining equity. The distribution percentage depends on the judge’s decision.
What Happens With the Mortgage on Your Home After a Divorce?
When undergoing a divorce, understanding the implications for the mortgage on your shared home is crucial. In suburban or urban settings, it’s common for both spouses’ names to be on the mortgage. However, many attorneys don’t fully explain the post-divorce impact on this financial obligation.
Scenario: Spouse Awarded the Family Home: Imagine your spouse is granted the family home in the divorce, along with responsibility for the mortgage, which is in both names. It’s vital to recognize that while the divorce decree binds you and your spouse, it doesn’t alter your obligations under the mortgage contract. If your ex-spouse misses mortgage payments, your credit score could suffer.
New Mortgage Challenges: Post-divorce, you might be ready to buy a new home. However, having your name on the previous home’s mortgage can hinder this. Your debt-to-income ratio is affected because you’re technically still responsible for the old home’s mortgage. If your ex-spouse delays or defaults on payments, it could prevent you from qualifying for a new mortgage.
Understanding these nuances is key to navigating your financial future post-divorce. It’s a complex situation where legal and financial advice can be invaluable.
How Can You Get Your Name off the Joint Mortgage to Your Old House?
Navigating the removal of your name from a joint mortgage after divorce is a common concern. In Texas, the final decree of divorce can include specific orders for this process.
Refinancing the Mortgage: A common method is ordering your spouse to refinance the home within a set period after the divorce is finalized. Refinancing cannot occur until the divorce is complete, as the property is still under joint ownership. However, your spouse might face challenges in refinancing due to factors like low income, poor credit score, or an unfavorable debt-to-income ratio.
Assuming Mortgage Responsibility: Alternatively, your spouse can sign documents to assume full responsibility for the mortgage. This depends on the lender’s policies. Your spouse should contact the mortgage lender early in the divorce process to explore this option. Qualification for assuming the mortgage alone is necessary.
Sale of the Home: If neither refinancing nor mortgage assumption is feasible, the judge may order the home to be sold. Judges aim to avoid placing either party in a financially precarious situation, such as falling behind on mortgage payments. Therefore, if no viable solution is found, selling the home is often the next step.
Each option has its complexities, and the right choice depends on individual circumstances and financial capabilities.
Pulling Equity Out of Your Family Home in a Texas Divorce
Selling the home is by far the easiest method of pulling equity out of your home during a divorce. The equity can then be split between you and your spouse without much fuss, according to the terms of the judge’s orders or your mediated settlement agreement. Usually, if your spouse is awarded the home in your divorce then the equity can be pulled out in the following manners.
If your spouse gets the house, then you will be awarded a community property asset that equals the share of equity that would ordinarily be yours had the house been sold. Or, if there is insufficient community property to divide you may be able to get some portion of your spouse’s community property share as well as a separate property bank account of your spouse’s.
We will discuss the additional ways to cash out the equity stake in a family home in tomorrow’s blog post. We hope that you have enjoyed today’s blog and we will return tomorrow to finish up where we left off by talking more about cashing out equity in the family home.
Questions about divorce and dividing up the family home? Contact the Law Office of Bryan Fagan
The attorneys with the Law Office of Bryan Fagan stand ready to assist you with any questions or concerns you have regarding your Texas family law case. Our attorneys have represented clients in every family court in southeast Texas and we do so with a great deal of pride.
To learn more about your case, our office or family law, in general, please do not hesitate to contact us today. We offer free of charge consultations six days a week. These consultations are a great opportunity for you to ask questions and receive feedback about your specific circumstances. Thank you for spending time with us today in reading our blog post.
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Other Articles you may be interested in:
- Considering whether to move out of the home after a divorce is filed? Read this blog first
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- Do I have to move out of the marital home during a divorce in Spring, Texas?
- Whether you should move out of the marital home during a divorce?
- Steps To Take Before Moving Out of the Marital Residence During a Divorce in Spring, TX
- Can I move to another city before filing for divorce?
- The Dirty Trick of Filing for Divorce in Another City
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- Should I move out of the marital home during a divorce?
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- Geographic Restrictions in Child Visitation Orders in Texas
- Common Law Marriage and Texas Divorce Guide
- 6 things You Need to Know Before You File for Divorce in Texas
Law Office of Bryan Fagan, PLLC | Houston, Texas Divorce Lawyers
The Law Office of Bryan Fagan, PLLC routinely handles matters that affect children and families. If you have questions regarding divorce, it’s important to speak with one of our Houston, TX Divorce Lawyers right away to protect your rights.
Our divorce lawyers in Houston TX are skilled at listening to your goals during this trying process and developing a strategy to meet those goals. Contact Law Office of Bryan Fagan, PLLC by calling (281) 810-9760 or submit your contact information in our online form. The Law Office of Bryan Fagan, PLLC handles Divorce cases in Houston, Texas, Cypress, Klein, Humble, Kingwood, Tomball, The Woodlands, Houston, the FM 1960 area, or surrounding areas, including Harris County, Montgomery County, Liberty County, Chambers County, Galveston County, Brazoria County, Fort Bend County and Waller County.
Bryan Fagan, a native of Atascocita, Texas, is a dedicated family law attorney inspired by John Grisham’s “The Pelican Brief.” He is the first lawyer in his family, which includes two adopted brothers. Bryan’s commitment to family is personal and professional; he cared for his grandmother with Alzheimer’s while completing his degree and attended the South Texas College of Law at night.
Married with three children, Bryan’s personal experiences enrich his understanding of family dynamics, which is central to his legal practice. He specializes in family law, offering innovative and efficient legal services. A certified member of the College of the State Bar of Texas, Bryan is part of an elite group of legal professionals committed to ongoing education and high-level expertise.
His legal practice covers divorce, custody disputes, property disputes, adoption, paternity, and mediation. Bryan is also experienced in drafting marital property agreements. He leads a team dedicated to complex family law cases and protecting families from false CPS allegations.
Based in Houston, Bryan is active in the Houston Family Law Sector of the Houston Bar Association and various family law groups in Texas. His deep understanding of family values and his professional dedication make him a compassionate advocate for families navigating Texas family law.
