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Community property and home equity in a Texas divorce

On Behalf of | Jun 3, 2024 | Family Law

Few assets represent financial stability the way that homeownership does. Those who have acquired their own residences often invest heavily in maintaining and even improving their homes. The equity that they accumulate can significantly increase their overall personal wealth.

People may rely on their home equity as a source of revenue later in life or may intend to pass it on to their family members as the biggest part of their personal legacy. Oftentimes, home equity is the first issue that people have questions about when they decide to file for divorce in Texas.

What do community property laws in Texas typically mean for those preparing for a Texas divorce?

Both spouses may have an interest in the property

Unless there is an airtight prenuptial agreement involved, home equity is often subject to division in a Texas divorce. Community property statutes require a fair approach to property division. Spouses report all marital access and debt. Community property rules begin with an assumption that a 50/50 split is fair, but spouses can present evidence to the contrary and seek more of the marital estate based on factors such as their health and uneven economic circumstances.

Either spouse could theoretically secure the right to continue living in the marital home. The other spouse should receive a fair portion of the home’s equity or other assets that represent a comparable amount of value. The spouse retaining the home may need to refinance after the divorce as a way of withdrawing equity for the other spouse and removing them from the deed for the property.

It can be disconcerting to wait for a judge to decide how much home equity someone gets to keep after a Texas divorce. Spouses have the option of negotiating their own arrangements for property division so that they control the division of home equity and other assets. Otherwise, they have to wait for a judge to decide what would be fair and equitable given their current circumstances.

Realizing that a 50/50 split isn’t always the outcome and that litigation isn’t always necessary could help people prepare for property division challenges in an upcoming Texas divorce. Those who focus on their long-term financial stability can set goals that make sense given their unique needs and circumstances.