What Happens to a House During a Divorce in Texas?
Reviewed by Mark Lee
Going through a divorce is one of the most stressful life events anyone can experience. Beyond the emotional toll, the financial complexities of untangling a life together can feel overwhelming—especially when it comes to the family home. In the Lone Star State, the laws governing real estate and marriage are unique, often leading to confusion about who gets the keys and who gets the bill.
If you are currently navigating a split in the Houston area, the house is likely your largest shared asset. Deciding whether to sell, buyout, or co-own isn't just a lifestyle choice; it's a major legal decision that will impact your credit and your bank account for years to come. In many cases, couples realize that a clean break is the best path forward, choosing to sell my house fast Houston to a “We Buy Houses Houston” professional buyer to liquidate the equity quickly and move on without the hassle of a traditional market listing.
In this comprehensive guide, we will explore the "Just and Right" division of property in Texas, the mechanics of community property, and the specific 2025 legal tools like Owelty liens that every Houstonian should know before signing their final decree.
Texas Community Property Law and Your Home
Texas is one of a handful of states that operates under community property rules. This creates a legal presumption that any property acquired by either spouse during the marriage belongs equally to both parties, regardless of whose name is on the deed or the mortgage.
The Presumption of Community Property
Under Section 3.003 of the Texas Family Code, all property on hand at the time of divorce is presumed to be community property. This means that if you bought your house while you were married, the court views it as a joint asset. Even if one spouse worked while the other stayed home, or if only one spouse's income was used to qualify for the loan, both generally have a 50% claim to the equity.
Separate Property vs. Community Property
There are exceptions to the community property rule. Property is considered separate property if it was:
Owned by a spouse before the marriage.
Acquired during the marriage as a gift or an inheritance.
Recovered as part of a personal injury settlement (excluding lost wages).
However, proving a house is separate property requires "clear and convincing evidence." If community funds were used to pay the mortgage or fund a major renovation, the other spouse may have a "reimbursement claim" for the value they contributed to the asset during the marriage.
The "Just and Right" Division: It’s Not Always 50/50
A common misconception is that Texas divorce courts must split everything down the middle. In reality, the law mandates a "just and right" division. This gives judges broad discretion to divide assets in a way that is equitable, even if it isn't equal.
Factors a Judge Considers
When a Houston judge looks at your family home, they will evaluate several factors to determine the split:
The Best Interests of Children: Often, the "custodial parent" (the one with primary physical custody) is awarded the right to remain in the home to maintain stability for the children.
Earning Capacity: If one spouse has a significantly higher income or better education, the court might award a larger portion of the home equity to the lower-earning spouse.
Fault in the Breakup: Texas allows for "at-fault" divorces. If one spouse committed adultery or was abusive, the judge may award the other spouse a greater share of the marital estate as compensation.
Health and Age: A spouse with significant health issues or who is near retirement age may be granted a more favorable division of assets.
To Sell or Not to Sell: Three Common Solutions
Once the character of the property is established, divorcing couples generally follow one of three paths. Each has its own financial and legal implications.
1. The Total Sale and Split
This is often the most practical solution for couples who need to liquidate their assets to afford separate living arrangements. The house is sold, the mortgage and closing costs are paid off, and the remaining cash is divided according to the divorce decree. This provides a clean break and ensures that both parties are removed from the mortgage liability simultaneously.
2. The Internal Buyout and Refinance
If one spouse wants to stay in the home, they must buy out the other's interest. This usually requires the staying spouse to qualify for a new mortgage in their name alone. The "buying" spouse pays the "selling" spouse their portion of the equity in cash. This is where a Texas Owelty Lien comes into play—a legal tool that allows the staying spouse to tap into the home's equity to pay off the ex-partner without the sale being treated as a "cash-out" refinance with higher interest rates.
3. Deferred Sale (Exclusive Use)
In some cases, the court may order a "deferred sale." This allows one parent to live in the home until a specific event occurs, such as the youngest child graduating from high school. At that point, the house is sold, and the proceeds are split. While this provides stability for children, it can be financially risky, as both spouses remain tied to the mortgage and the property's value for years after the divorce is final.
Managing the Mortgage During the Divorce Process
While the divorce is pending, the mortgage must still be paid. Texas judges often issue Temporary Orders that specify which spouse is responsible for the monthly payments, utilities, and maintenance while the case is in court.
The Debt Liability Trap
It is vital to remember that a divorce decree does not override a contract with a bank. If the decree says your ex-husband is responsible for the mortgage, but your name remains on the loan, the bank will still hold you liable if he misses a payment. This can destroy your credit score exactly when you need it most to secure a new apartment or a different home loan. This is why most attorneys recommend a full refinance or a sale to ensure all joint debts are satisfied.
Protecting Your Equity from Hidden Liens
Divorce often brings financial secrets to light. Before dividing the equity in your Houston home, it is essential to perform a title search. In Texas, certain debts—like federal tax liens or judgment liens from credit card companies—can attach to community property even if only one spouse incurred the debt.
Under the IRS guidance on Community Property, a federal tax lien against one spouse can attach to the entire property. If these liens aren't settled during the divorce, they will be deducted from the sale proceeds later, potentially leaving one spouse with nothing. Addressing these debts early is the only way to ensure the equity you are fighting for actually exists.
Frequently Asked Questions
Can I sell the house before the divorce is final?
Yes, but only if both spouses agree or if the court orders it. Selling during the divorce can sometimes be beneficial because it simplifies the final asset division and provides cash for legal fees and new housing. However, you should never list the property without a written agreement or a court order, as doing so could violate a "Standing Order" which is common in Harris and Montgomery counties.
What is an Owelty Lien?
An Owelty lien is a specialized type of lien used in Texas divorces to facilitate a buyout. It allows one spouse to take out a mortgage that covers both the existing debt and the equity owed to the other spouse. It is the most common way to "cash out" an ex-spouse while keeping the house.
What happens if the house is "underwater"?
If you owe more than the house is worth, the "asset" is actually a liability. The court will determine a "just and right" division of the debt. This may involve a short sale, or one spouse may agree to take on the debt in exchange for a larger portion of a retirement account or other liquid assets.
Does my spouse get half if I owned the house before marriage?
Not necessarily. The house is likely your separate property. However, if you used "community funds" (money earned during the marriage) to pay the mortgage or taxes, your spouse may be entitled to a reimbursement for half of those payments. Additionally, any increase in value due to renovations paid for with community funds is often subject to division.
What if my spouse refuses to sign the listing agreement?
If the court has ordered the sale of the home and one spouse refuses to cooperate, the judge can appoint a Receiver. A receiver is a neutral third party (often a real estate professional) who takes total control of the sale process, including signing the listing agreement and the final closing documents, to ensure the court's order is carried out.
Conclusion: Navigating the Fresh Start
A house is more than just four walls; it’s an investment, a shelter, and a repository of history. When a marriage ends, the transition of that property requires a steady hand and a clear understanding of Texas law. Whether you choose to fight for the home or walk away with your share of the equity, the goal should always be financial independence and a clean break from joint liabilities.
If you find that the traditional real estate market is too slow or the tension with your spouse makes showings impossible, exploring alternative exit strategies can save your credit and your sanity. By taking proactive steps to understand your rights, you can protect your equity and move toward your new chapter with confidence.
How Absolute Properties Helps Houston Sellers
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