Book an appointment using SetMore

If I Added My Ex to Our Mortgage During Refinancing Is That Now Considered Marital Property?

Questions regarding real estate and divorce are always at the front of people's minds when considering a split from their spouse. A real estate purchase is likely to be among the most significant that you make during your life. Not only is there the aspect of finances when it comes to real estate, but you also have the emotional aspects that are relevant to any real estate transaction. If you are getting a divorce and your family home will be sold as a part of the divorce, then you have more than just your financial assets in mind during that whole process.

I think that is one of the most exciting components of divorce regarding real estate. Namely, how the personal and emotional portions of real estate transactions related to the purely financial and economic considerations that are also part of those stages of a case. Our attorneys take a great deal of pride in being able to help our clients by providing advice, perspective, and strong advocacy for their interests during a divorce. A crucial part of offering advice to real estate in divorces is to provide basic information so the client can make the best decisions for themselves and their children.

When you have a substantial financial stick in a piece of real estate, you need to have factual information to go off when making decisions within your divorce. We are all exposed to a lot of information from family, friends, the Internet, and the myriad of television shows related to real estate and honest buying and selling of real estate. It would be easy to get caught up in the storm of all these pieces of information and feel that you cannot make a decision based on the differing viewpoints you are absorbing.

Couple all the information you may be getting from competing sources with the current real estate climate, at least residentially, in Southeast Texas and our nation. While the economic slowdown and shutdowns associated with the coronavirus indeed were not beneficial for our economy as a whole, what they did do was seemingly drive up demand for residential real estate both in our area and across the nation.

I am not here to provide you with an overview of the real estate market or speculate why residential real estate prices seem to increase throughout 2020. Still, I think it has something to do with pent-up demand that eventually boiled over in May and June of 2020 as our economy and society began to open up after the initial shutdowns and quarantines associated with the government's response to the virus. With that said, people are generally more aware of the climate with residential real estate because prices right now are higher at this point when compared to last year or the year before.

This is the environment that we find ourselves in Right now. To recap, many businesses in the economy as a whole seemed to be opening up now as we approach the fall months. The demand for homes has been steadily increasing since a law in March, April, and May, and those of you considering divorce are caught in the middle of this discussion. In the importance of getting it right the first time when it comes to handling matters related to real estate during your divorce.

A relevant question to ask yourself would be whether or not your home mortgage has been refinanced since you initially took out the home mortgage. For those of you reading today's blog post that is unaware of what a refinance home mortgage is, it is when You and your spouse choose two obtain a new mortgage loan on your home to secure a lower interest rate, more agreeable length of the mortgage or for any other reason. For instance, people will often refinance their home mortgage to pull cash out of the home to complete a renovation or any other reason where money is necessary.

A refinanced mortgage is not simply a reworked original mortgage on the home. A refinance mortgage is where you obtain a brand-new loan on the house. The initial mortgage is paid in full and canceled, and the refinance mortgage takes the place of the original mortgage. Depending on the circumstances that you and your spouse find yourselves in an original mortgage may have and only one of your names while the refinance mortgage bears both of your names. This may have happened if, for instance, only one of you applied for the mortgage the first time around due to issues with a credit score or other eligibility problems that would have been a curd had both of your names been on the application.

Now that we have introduced the topic of real estate, property division, and refinance mortgages in the context of a Texas divorce, it is time to discuss whether or not a refinanced mortgage changes the characterization of a home as far as being part of a spouse is separate property or joining the community estate. Essentially, I'm asking if a house that was previously part of your individual property now becomes community-owned due to your spouse's name being added to a refinance mortgage?

A word on community property in Texas

Texas is a Community property state when it comes to property division in your divorce. All property owned at the time of your divorce by you and your spouse is presumed to be Community property. The most accessible and most simple rule that I can apply in this setting to Community property as far as an explanation is concerned would be to tell you that property purchased during your marriage is presumed to be community-owned. To establish that a particular property or asset is part of your or your spouse is a separate estate, you would need to show that it was purchased before your marriage, was gifted during your marriage specifically to you, or was inherited by you or your spouse separately from the other person.

Let's assume that you purchased a home before your marriage. That home is where you lived for three years by yourself before marrying your wife. Once you all got married, your spouse decided to move in with you into the house you'd purchased years ago. Of course, when you took out a home loan Way back when you bought the house, it only had your name. Your wife hadn't even entered the picture at that point.

Throughout your married life, the income you earned from your job went towards paying that 30-year mortgage. Your spouse remained in the home and never entered the workforce to maintain the house and help raise your children. Now we are in the present day, and you are considering filing for divorce from your wife. A significant question that has entered your mind is whether or not the home mortgage, which was refinanced one year ago into your name and your spouse's name, has somehow changed the characterization of your home.

We had already discussed how your home has always been your separate property due to your having purchased it before the date on which you became married to your spouse. The question we now would have to answer is whether or not, by refinancing the home mortgage into your name and your spouse's name, the house is now community-owned. This is an exciting question And. In some states, it may change the conversation as to how the home should be divided in the divorce. The reason for this is that many states, under common law theories of marital property, look to the title or mortgage documents when determining how a home should be split at the time of divorce. In Texas, however, such principles are not applied. Allow me to explain in greater detail.

The default setting in Texas divorce scenarios is not for a court to look to title or mortgage documents when determining ownership interests at home, another type of real estate for any property at all. If your case were to make it to a judge, the judge would be most concerned with identifying the date on which property ownership is vested in you and your spouse or either of you separately. For instance, the court will be most interested in seeing when the date of the trust or other title documents were dated asked to win the house officially was purchased. The names on these documents are not as relevant as the data.

The bottom line for our discussion today is that if the date on which the family home was purchased occurs before the date of your marriage, then the house will be classified as your separate property. It does not matter if a home mortgage was refinanced during your wedding. that in and of itself does not change the characterization of your home from being separately owned by you. However, as with many things in the law, there may be an exception to this rule that we have just gone over.

Under the example that we've discussed today, if the home you purchased before your marriage now has your name and spouse's name on a refinanced mortgage, you could be argued that you have gifted a 50% interest in the home to your spouse. What does this mean? Within your divorce, your spouse in their attorney could make settlement offers to you based on A one-year and 50% ownership stake in the house. While this amount of money may be somewhat small compared to the home's overall equity, it could make a difference when negotiating on other community property matters.

For example, suppose your spouse and her attorney make an argument that she owns a portion of the home given her name appearing on the refinance mortgage. In that case, she may ask for a certain amount of money or property from your community, a state that she would not be entitled to in other circumstances. Suppose she figures that her ownership interest in your home is equal to 10,000 dollars, for example. In that case, she may ask for a more significant share in your retirement, in money from your bank account, or from a property in the home to make up for the difference. Or, if your home will be sold in the divorce, she may ask for a percentage of the equity once the home is sold. Keep in mind that the house was your separate property and could not be divided in your divorce as a result. However, she may have been eligible for reimbursement from the community income used to pay the mortgage or update and renovate the home since the beginning of your marriage.

The question of real estate and natural property division in Texas is a contentious one. How you and your spouse divide real estate in your divorce or choose not to can impact both of your financial futures for years to come. Community property law factors into this discussion a great deal. Given the importance of community property In Texas divorces and how much the law impacts real property on property division, you must know the ins and outs of these subjects to proto divorce confidently.

Questions about the material in today's blog post? Contact the Law Office of Bryan Fagan

If you have any questions about the material that we shared 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 in person, over the phone, and via video. Please get in touch with us today to learn more about your circumstances and our office's services to you and your family.

Categories

Sign Up Here to Download Our eBook!

Fill out the form below 
  • Please enter your first name.
  • Please enter your last name.
  • Please enter your phone number.
    This isn't a valid phone number.
  • Please enter your email address.
    This isn't a valid email address.
  • Please make a selection.
  • Please enter a message.