4 Common Title Issues in Divorce
Divorces can be sticky—especially when it comes to shared property. Issues arise due to Texas community property laws, homestead and recording requirements—all while emotions run high and communication is broken. If you are assisting a client in the midst of a pending divorce, understanding the documentation and requirements of title transfer in divorce will help you prepare your clients for the road ahead. Here are a few of the more common title issues that can occur during a divorce.
Purchase of a Property during a Pending Divorce
If one spouse desires to purchase a home prior to the finalization of his/her divorce, Texas community property rules come into play. Generally, a property purchased during marriage is presumed to be community property (owned by both husband and wife). Since the divorce isn’t final, the new purchase would technically be owned by both spouses, even if the intent was for only one of the spouses to take title. While the ownership issue can be sorted out in the final divorce decree, until that time, the buyer’s lender often requires the non-purchasing spouse to join in the execution of the deed of trust mortgage, to ensure that the lien is valid against any community property claim. The injection of the non-purchasing spouse into the transaction often leads to some difficult communication and negotiations, but typically cannot be avoided. Perhaps the best strategy is for both spouses to wait until the divorce is finalized before purchasing a new property.
Selling the Jointly-Owned Home
Before a divorced person may sell their formerly jointly-owned home, they must first make sure that title to the property has been properly transferred from their ex-spouse. The first step is to ensure that the divorce decree contained proper language to divest the non-owning spouse from title. If the proper terms are included, then the divorce decree itself operates as a “muniment” of title; it passes title itself without the need for a deed from one spouse to another. However, even though the divorce decree has cleared up legal ownership, the real estate records must reflect the transfer to put the public on notice of the change. The owning spouse would have two choices; either file the divorce decree in the real property records, or obtain and file a separate deed from the ex-spouse to them. Obviously, since most folks would rather not have the terms of their divorce displayed so publicly, they would be much better served by having their ex-spouse convey title to them by deed. After the divorce is final, it may be extremely difficult to get any cooperation, so the parties should endeavor to get the deed signed along with the other final divorce documents.
Passing Deeds from One Spouse the Other
Despite what you may hear from others, including family law attorneys, a spouse should require a full warranty deed from their ex-spouse, not a quitclaim deed. A quitclaim does not contain the necessary conveyance language to avoid future title insurance problems.
Property Owned Before Marriage & Carried Throughout Marriage
If a person enters into a marriage already owning property, and subsequently gets divorced, that property would typically remain separate property during, and after, the marriage. But to the extent community funds (such as salary and other income earned during the marriage) are used to pay the mortgage, taxes, insurance and other expenses, the non-owning spouse would have a right to partial reimbursement of those expenditures upon dissolution of the marriage. As a result, the property must often be sold, with the proceeds split according to the judge’s decision.
Content derived from Jeffrey A. Rattikin, Attorney at Law, RattikinLaw Fort Worth, www.rattikinlaw.com. Copyright 2017, All Rights Reserved. This Title Tuesday tip is not a legal representation or statement of law, but is presented for general informational purposes only. Please confer with legal counsel of your choice for any and all legal questions.