The decision to buy a home is probably the most significant financial decision that most of us will ever make in our entire lives. This is because not only are you making a substantial financial investment in a home purchase, but you are also making an emotional decision about where you will be raising your family and where You will be planting roots for yourself. Most people remain in their home for at least five years before moving, so you're near impossibly long-term future is directly tied to the house that you choose to buy.
On a personal level, I think looking at homes, analyzing the real estate market, and observing what people do when it comes to purchasing a home is extremely interesting. Maybe the proliferation of home buying shows on television, or just curiosity, causes my wife and me to check out the various real estate websites to see what houses are selling for and what homes in our area are going for. With that said, buying a home and being intentional about purchasing that home is anything but fun and games.
It used to be that when people would buy a home, they would do so with their spouse. If you were so motivated, I'm sure you could go to Google and look up the percentage of homes purchased with a spouse from the 1950s to the current day. I am confident that the statistics show that single individuals and unmarried couples buy more houses today than in prior generations.
What impact this will have on the real estate market, foreclosure rates, and homeownership overall is yet to be determined. However, it is essential to note that you have legal consequences regarding purchasing a home either with a spouse or with the person you are not married to. I say this not as a judgment or in an attempt to preach to you, but if you are thinking about purchasing a home with someone you are not married to, you will want to pay close attention to what we discussed in today's blog post.
Being in an excellent position to buy a home is just as important as the type of home you purchase or where you purchase it. As an attorney, I can see many people who make life decisions when they're doing well financially and when they're doing poor financially; the thing about making decisions when you are doing well financially is that you have options and have less pressure on your shoulders to do something that may not be the best for you and your family. For example, if you have money in the bank, an emergency fund, and a solid career, the new likely wouldn't feel like you have to buy a house right now when interest rates are low or when housing prices are typical due to changes in the economy.
On the other hand, when you have less money saved away and do not have a solid career and our feeling like your time and options are limited in terms of buying a home, you may go ahead and make a decision that is not necessarily in your best interest. The simple truth is that when you have fewer options, you begin to act desperately, and desperate people do not usually make good decisions. Decisions like this are generally made at the spur of the moment and are typically not well thought out or intentional.
Purchasing a house with your spouse offers you several different advantages versus buying a house with someone you are not married to. It doesn't matter if the person who purchased the home with is your roommate, girlfriend, boyfriend, parent, brother, or another person who is not your spouse. The law protects married people who purchased a house together in ways that do not cover other people. That is what I would like to discuss with you in the next section of today's blog post.
How does the law favor marrying and then purchasing a home?
As I mentioned a moment ago, the law in Texas does offer protections for persons who purchase homes when they're married. The most basic protection that you are provided when buying a home with your spouse is regarding community property. Community property laws come into play when you and your spouse get divorced, and property thus needs to be divided between the two of you. Community property dictates that all property at the time of your divorce is presumed to be owned by you and your spouse as Community property. Community property must be divided up after your divorce case in some form or fashion. This means that your spouse would not be able to walk away are there with your house or the equity or both in the divorce unless you have given your consent to them doing so. Desk, you are ensured that money you paid into the house mortgage or towards improvements on the house will not go unnoticed.
In a typical divorce, when a couple owns a community property home, a couple of different scenarios typically play out. The first is that the family home will be sold due to the divorce, and the equity in the home will be split between the two parties. If you are married and purchased a home during your marriage, that home will be classified as community property. It doesn't matter if the house only bears your name or that your income went towards paying the mortgage. In Texas, this house is just as much your spouse's as yours despite their lack of input regarding financial resources.
As you can see, this is a setup that benefits a spouse who has less financial wherewithal in less in the way of financial resources. It doesn't matter if your spouse never contributed a dime to the economic benefit of your family; all that matters is that you all were married at the time the home was purchased. At that point, they have every right to take an ownership interest in that home as you do. Given this scenario, you would not be able to strong-arm your spouse into getting more economic benefit out of the house in the divorce.
An alternative situation could arise if either you or your spouse choose to remain in the house after the divorce in which the other spouse gives their approval. At that point, a mortgage can be refinanced into the staying spouse's name, in any equity in the home can be paid 1/2 two the spouse who is leaving home. Or, no equity may be pulled out of the house, and a similar amount of money from other portions of the estate may be divided end given to the spouse who is leaving to make everything even.
You should be able to tell from this discussion that Community property laws enable spouses to have their interests protected at the time of divorce. Many potential clients of our law office will ask if their spouse can completely dominate in the property division phase of their case to the point where they may be left with nothing at the end of their marriage. It is with a great degree of confidence that, due to the Community property laws in our state, I can tell these people that the likelihood of this happening is very low.
What can happen if you purchase a house with someone you are not married to?
Buying a house with the person that you were married to is risky. There is no other way for me to say this. I'm not trying to make a moral judgment on you if you have purchased a house with someone with whom you are not married. I do not necessarily even have in mind a scenario where you and your boyfriend or girlfriend have purchased a house together. I could talk to you about buying the house with a relative or even with a roommate. The simple truth is that buying a home with anyone other than your spouse can be risky for you from a legal standpoint.
No matter how serious you and your partner are, your very close dating relationship is not equivalent to a marriage in the legal sense. It may feel like you all are married, and you may treat yourself as married, but before the law, you will be treated as two unmarried persons who have purchased a home together. If one of you wants to move out of the house, one of you dies, or any situation in between, then the law is not there to protect you as it would be under community property for married persons.
Let's take a situation where are you and your significant other purchase a home together here in Houston. He lives in the house for about one year when his considerable other suddenly passes away. Your significant other dies without a will, and under the laws of intestate succession, your additional shares of the house go to her mother. At that point, you own a home with your girlfriend's mother and have to sort this problem out when she wants to so the house and share in the equity. If you do not agree to sell the house, then went to remain in it yourself, you will likely have to buy her out of the equity stake in the home and go through any other legal processes involved therein.
Let's think about a situation where you own a home in your name and have a mortgage on the home in your name as well. Then let's further suppose that you and your longtime boyfriend have lived in the house for over a decade. If you and your significant other break up after ten years of being in a relationship, the question would be whether or not you would have to pay your ex-significant additional money due to their having contributed to the mortgage payments, improvements on the home, and other things around the house. Had you and your significant other been married during this period, there wouldn't be much question about the other person's stake in the place.
Either the home would need to be divided an equity split between the two of you, or at the very least, your spouse will be entitled to some degree of reimbursement for Community property having gone towards the payment of a mortgage on a home that could have been your separate property had been purchased before the time you and your spouse got married. In a situation where you and your significant other never got married, your significant other would have to file suit against you in a civil court to be paid something for their efforts in paying the mortgage and making improvements on the home. This can get tricky and cumbersome and takes you squarely out of the family court and into a general civil court.
Questions about the material contained in today's blog post? Contact the Law Office of Bryan Fagan
if you have any questions about the material contained in today's blog posts; please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultation six days a week in person, over the phone, and via video. These consultations are an excellent way for you to learn more about the world of Texas family law and about the services that our law office provides to our clients.