In many states, the two most common options to divide the marital homestead in a divorce are either for the parties to agree to a sale, or for one of the divorcing parties to buy out the interest of the other. Sometimes neither of these alternatives is best.

Sale in a down real estate market may be detrimental to both spouses. As for the buy-out option, the spouse remaining in possession might not be able to quality for a refinance mortgage large enough both to include the lien of the original mortgage and the amount to be borrowed to buy out the spouse who vacated.

Texas Courts permit the vacating spouse to be granted a lien upon the homestead representing their share of the equity which is a fixed amount. A note and deed of trust can be given by the spouse remaining in the house to the vacating spouse to provide monthly payments to gradually buy out their interest. The amount of the payment and the interest to be charged can either be the subject of agreement between the parties or determined by the Judge at trial.

If there are minor children of the marriage, Texas Courts have been very protective of the children’s interests in remaining in their home. The Court can award the house to the spouse with the right to determine the children’s residence and provide that the house be sold upon the youngest child finishing high school. The Court can order a lien be placed upon the house to protect the vacating house until the time of sale.

Alternatively, spouses through mediation can negotiate a settlement which offsets the value of the equity against retirement or other assets. For example, the wife keeping the house may accept a smaller share or no share of the husband’s retirement assets. Or the Court in a trial may do this same kind of equalization.

Submitted by,

Attorney Sharon L. Michaels

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