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What happens to a mortgage in divorce in Texas?

Last Updated on October 9, 2021 by Melody McDonald

When a couple owns a home and the marriage ends in divorce, important decisions must be made about what to do with the home. One spouse may want to remain in the home, but who then makes the mortgage payment? There are several factors that come into play in determining what happens with the home, including credit rating, equity in the home, and how the home or property was financed and titled.

How Can Community Property Be Divided?

Texas is a community property state, which means any property that couples acquired during the marriage will be divided in a way deemed “just and equitable” by the court. Family Code Chapter 3 indicates that Texas property is typically equally divided.

Community property, however, includes real property which cannot be divided, which means both spouses must decide the value of the marital home and property in order to determine how equity and debt will be split. While spouses may decide to sell the marital home, they may also come to an agreement that one spouse will keep it.

  • Spouses may decide that one spouse remains in the marital home and is responsible for the mortgage or other debts.
  • Spouses may agree that one spouse remains in the house on the condition the other spouse is given half of the equity.
  • One spouse who remains in the house may give the other spouse assets that offset the home’s value so that property division is equal.

Mortgage in Divorce: Selling the Marital Home

Almost any judge in the state of Texas will agree that selling the marital home and dividing the proceeds is one the easiest way to deal with marital property. If there are remaining mortgage payments, it is possible to come to an agreement regarding how much spouses will pay. If one spouse remains in the marital home and agrees to take on the mortgage payments, this problem is solved.

However, many people who have lived in the family home for years and raised a family in that home find it difficult to just sell and move on. They have made memories in the home and leaving it just does not seem like an option. In this situation, there are some important considerations to keep in mind to protect both spouses.

Home Ownership in Texas

When a divorce decree awards the marital home or property to one spouse and that spouse fails to pay the mortgage, the other spouse becomes responsible – even when the spouse living on the property was ordered by the judge to pay the mortgage.

In other words, a person can lose ownership and possession of property pursuant to a divorce decree and still be on the hook for the mortgage. Even worse, the mortgage company is not limited by a family court judge’s ruling that one spouse is alone responsible for paying the mortgage.

When One Spouse Remains in the Marital Home

It is vitally important for couples who are divorcing with one of the spouses wanting to remain in the marital house to consider several things, including potentially a Deed of Trust to Secure Assumption and/or a Special Warranty Deed.

One of the first things to consider is whether either spouse can qualify for a mortgage refinance determined upon their own income, without the income of the other spouse. The spouse who wants to live in the home should find out if they can pre-qualify for mortgage refinancing by contacting a lender. If it all works out and one spouse can remain in the marital house and assume the mortgage payments, it is straightforward. That said, there are protections both spouses will want in this situation. They include:

  • Special Warranty Deed. A Special Warranty Deed protects the spouse remaining in the marital home so that the non-resident spouse cannot stake a claim on the property following the divorce. This deed transfers one spouse’s interest in the marital property to the spouse staying on the property; it also makes it possible for that spouse to secure a mortgage refinance.
  • Deed of Trust to Secure Assumption. A Deed of Trust to Secure Assumption ensure that the spouse who will not remain on the marital property will not be liable for making mortgage payments if the other spouse fails to make the payments. The spouse remaining on the property will sign this document which states that he/she assumes future mortgage payments, relieving the other spouse of any future liability.

Legal Issues Involving the Marital Home

In Texas, it is not unusual for the court to award the marital home to the spouse who is given primary custody of any children. This is not a hard and fast rule, but it is common. The judge may determine that remaining in the home is in the best interest of the child or children involved.

So, what happens to a mortgage in divorce when no children are involved? The court may analyze each spouse’s income to determine who can afford the mortgage payments when one spouse wishes to remain in the house. This can be catastrophic when a spouse who is awarded the house fails to have the mortgage refinanced. In the event one spouse gets the marital house but finds it impossible to pay the mortgage on a single income, both spouses may face foreclosure on the property. To prevent this potential scenario, the court may order the marital property be refinanced within a certain amount of time by the spouse who was granted the home in the final divorce decree. Otherwise, the house will be sold.

Consult with an Experienced Texas Divorce Attorney

When it comes to the topic of divorce and mortgage payments, there are substantial legal issues that may arise. An experienced Texas divorce attorney at Varghese Summersett Family Law Group will provide the legal guidance and support necessary to help you understand all of your legal options. Consider scheduling a consultation with one of our compassionate and experienced Texas divorce attorneys today by calling (817) 900-3220.

Benson Varghese
Benson Varghese
Benson Varghese is the founder and Managing Partner of Varghese Summersett PLLC. He's been named a Super Lawyer and a Top Lawyer by Fort Worth Magazine.

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