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Buying a house during a divorce

When the time is right, there is no more exciting feeling than moving yourself and your family into a new home. It is the culmination of hard work, planning, saving, and completing the journey that so many of us both look forward to and dread. No matter what the "housing market" is like when you are buying your home it is a process to get into the home that you want. Issues with the purchase price, repairs, financing, and the move itself. The list goes on and on as far as reasons why buying a home is not as straightforward as television shows may make it seem.

The process associated with buying a house becomes even more cumbersome and difficult when you are going through a divorce. We can say all we want about the divorce process but one thing that it is without a doubt is difficult. There are many other words that we could also use to describe a divorce but difficult is right up there with the best of them. So, when it comes to actually doing it why even bother? You already have so many things going on in your life that buying a new house while you are divorcing may seem like a foolish endeavor. However, the attorneys at the Law Office of Bryan Fagan understand that everyone brings their own, unique circumstances into a divorce. One of those circumstances may be that you have started or are planning to buy a home shortly.

What we would like to discuss with you in today's blog post is what are the consequences of buying a house during a divorce. On the flip side, are there any advantages to buying a house during a divorce? How does a house factor into the property side of a divorce? These are the questions that we will be asking and answering today. As always we also understand that your particular experiences and circumstances are what matters to you. We are aware that the information in this blog post could have limited application in your world. As a result, we want you to know that our office has a great option for you to take advantage of once you are done reading this blog post.

If you have specific questions about your own divorce and/or home-buying experience that you want to run past a group of attorneys who have been there and done that, then please contact the Law Office of Bryan Fagan today. We offer free-of-charge consultations six days a week in person, over the phone, and via video where we can answer questions and talk to you one on one about your circumstances. Reading our blog is a great place to begin your journey toward gathering information about divorce but it should not be the last place you look. Rather, you can use the opportunity to speak to one of our attorneys to get a better idea about what you need to do to get ready for your divorce.

What role does property play in a Texas divorce?

The particular role that property will play in your divorce depends upon how much property you and your spouse own as well as how complicated that property ends up being divided. Texas is a community property state. This means that the state adheres to principles of community property when dividing marital property in a divorce. The basic presumption that applies to spouses and their property when going through a divorce is that all property owned by you and your spouse at the time of your divorce is presumed to be community property and thus divisible in the divorce.

Now, we know that there are probably some things that you own (and that your spouse owns) that you owned before getting married. If you are on a second or third marriage and are in your forties, fifties, or sixties then most of the property that you own may be separate property. On the other hand, if you and your spouse have been married for a long time or you are relatively young then most of the property that you own may be properly classified as separate property. This is what I mean by the particular circumstances that you find yourself in are going to be extremely important when it comes to how your property is going to be impacted by your divorce.

For many people who go through a divorce community property division is not complicated. You can fairly well classify your separate and marital estates and then the only thing left to do is to work out with your spouse how to divide up the marital estate. There are an endless amount of ways for you all to accomplish this objective. Whether that is through one on one negotiations over the dinner table or in formal settlement negotiations via mediation, the point is that when you are trying to figure out how to divide up your marital estate you need to think about the type and amount of property that you own as well as the separate property that each of you owns, as well. 

At the beginning of a divorce, it is recommended that you perform what is known as an inventory and appraisal. An inventory is an act of figuring out how much property you own and what kind of property it is. Stores do inventory each night or every week to figure out what they've sold and what they need to order either more or less of. It can be somewhat time-consuming but it is important nonetheless. We recommend that you perform an inventory of your home, business, storage unit, or any other place where you own property immediately once you start the divorce. If you are going to be the spouse who files for divorce then you have time to plan for all this. Being the responding spouse means that you have less time to deal with the inventory process but you should still begin it at once after you have filed for divorce. 

This can be as simple as going to each room in your home and taking photos of everything with your cell phone camera. That means opening drawers, closets, etc., and taking photos of everything that you see. Don't forget the garage, storage sheds, and other places where the property tends to sit. Look through your safes and inventory what you have there. This does not need to be something secretive but you should try to do it as soon as possible. The reason is that you do not know if you are going to get another opportunity to come inside the home and do this inventory later on. You may lose access to the house during the divorce and then you would need to ask your spouse permission to re-enter the home to do so. Rather than go through all the trouble associated with this you can choose to perform the inventory then and there and be in a better position to know what property you own. 

There are also other types of property that you may not need to take photos of but is just as important. The type of properties that I am envisioning are your bank accounts, retirement savings, investments, etc. This type of property is probably kept online. Make sure that you have all your log-in information handy and that you are keeping track of your investments while the divorce is ongoing. It would be a shame to spend a lifetime on some of these investments but then to see them lose a great deal of value during a divorce because you were not paying close attention. Knowing the balances of each account at the very least can be helpful when it comes to planning for your divorce. 

Real estate and small business division in a Texas divorce 

When it comes to real estate and small businesses division in a divorce then we find ourselves getting into deeper and more complicated waters as far as classification and division (if necessary) of the property is concerned. You may own a small business that your spouse has never worked in or worked on. All she may know is that it generates a paycheck for you. Even so, the business and the income generated from it may be community property depending on when it was created. At the very least you may be in a position where the property needs to be divided in some way or at least considered for reimbursement if you have used community funds to improve or build up the business. 

This begins to be more complicated than going through the knife and fork drawer at home and figuring out how to divide up your silverware. Businesses are much more complex and having an expert in this field, like an accountant, assist you in performing all the steps needed to care for your business in a divorce may be a wise idea. It may not be the idea that makes you the happiest but it is something where you can plan ahead of time and think about what your options may be as far as handling matters related to a small business in a divorce. If you have no idea where to begin then contacting one of our attorneys to find out more can be a great place to start your analysis. 

Businesses that need to be divided up or at least have equity paid to a divorcing spouse need to have a value attached to them. Valuing a business can be tricky. There are multiple ways to do it, first of all. Taking account of all the accounts or clients that the business has is one method where you try to figure out what the current value is in addition to the value of those accounts in the future. How much are you making now and how much money can you expect to make in the future? You can also consider the value of your business from the perspective of what your business means in the community. We can also think of a local business that we associate with quality service or a product that just works well. There can also be a value attached to your name and reputation and how you are thought of in the community. Finally, you can also consider what the value of your inventory is.

Real estate valuations are more straightforward. There is a larger market for a single-family home than there is for a small landscaping business. To learn the value of the real estate you would need to contact a real estate agent or broker to help provide you with more information on that subject. Selling a home during a divorce is more common than buying a home during a divorce. Usually, this is done by agreement with you and your spouse or upon the order of a judge. The main point that you need to work to sort out in this regard is what you can do with the equity from the sale of a home. Dividing the equity can be done in a variety of ways and the circumstances of your case will impact how that property is divided, as well.

What we want to determine is how you can go about buying a home during the divorce which would make the case significantly more complicated. However, if that is the situation that you find yourself in then we will need to walk through some of the issues that you encounter as well as the problems that you may need to factor into consideration during this time in your life. It is not easy to have to handle the purchase of a home during a divorce. However, we can discuss what it means to do it and what to be aware of regardless of why this is a relevant question for you. 

Buying a house during your divorce

If you plan to buy a house during the divorce it is strongly recommended that you wait. The reality is that buying a house is a lot of work and a divorce is a lot of work. Add onto that any responsibilities that you have with your family and work and we have a combustible situation. You should think about waiting so that you do not overwhelm yourself during a time that is going to be physically, emotionally, and intellectually challenging. For many people, a divorce is the toughest thing that they will have to go through in their lives. I have often thought that buying a house is about as stressful a situation as a person can find themselves in, as well. The combination of the two makes life tough. 

First, if you buy a house during the divorce, likely, the title company that insures that the title to your home is clear and ready for purchase will not allow the closing to take place unless your spouse signs the title or deed to the home. This is an awkward situation where your spouse may need to be on the title of a home for a short period before your divorce. You may even need to negotiate for the removal of their name from the title once the divorce is over. For example, you can negotiate to have her deed her portion of the home over to you within 10 days of the divorce being finalized. Or, you may be able to work something out with the title company to not have your spouse have to sign the title or deed.

Next, if you are buying a house during the divorce it is important to consider what the implications of the sale will do to your cash flow and savings. Divorces can be expensive. That doesn't mean that your divorce will be expensive but it is a possibility. With that said, you do not want to put yourself in a situation where you become “cash poor” as a result of a home purchase. You may need that cash sooner than you think to spend in the divorce or on your children, for example. Almost nobody thinks to themselves after the sale of a home that the process was less expensive than they thought.

At the very least you may be dealing with a situation where your spouse will need to be reimbursed for the community income that went into the purchase of the home. You would need to keep a detailed accounting of how the sale occurred, what money you spent on a down payment, closing, etc. This is what you should expect to encounter if you decide to buy a house during a divorce. 

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 post please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law as well as about how your family's circumstances may be impacted by the filing of a divorce or child custody case. 

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