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Yours, Mine and Ours: Home Ownership in Divorce

Thu, 08/24/2017 - 16:04 -- admin25

by Jodi Bender

Jack and Jill went up the hill,
To buy a house together
Though still unwed, they lived instead
Without a wedding’s tether

But later on their fears were gone
The knot they swiftly tied
Alas those vows they did espouse
Were later cast aside

So Jack and Jill went down the hill,
Their union soon to split.
But who was owed their fine abode,
And who was doomed to lose it?

            —original poem by Matthew Eitzen

The tale of home ownership appears simple to many. Jack and Jill, madly in love and preparing for marriage, buy a home together. They each contribute equal amounts towards the down payment and then take out a joint mortgage. After marriage, their salaries pay down the mortgage. But if they file for divorce, the issue of who owns the home and in what percentage becomes a point of contention.

Putting aside reimbursement claims that the community estate may have, the home is most likely co-owned by Jack and Jill as their separate property in pro rata shares in a percentage based on the amount of consideration each paid at closing. Since the Texas Constitution and Texas Family Code prohibit a court from divesting a party of his or her separate property on divorce, it is reversible error for a court to award ownership of a house which is partly the separate property of one spouse to the other spouse.

However, the court can order the sale of property in which each spouse owns an undivided one-half interest through general property partition laws. By doing this, the court converts the property from undivided separate real property to cash which can be divided in the appropriate amounts. Although partitioning jointly-owned property among co-tenants is not part of a divorce proceeding, courts have confirmed that a partition action under the Texas Property Code can be raised concurrently with a divorce.

The Texas Property Code permits “any joint owner of real property or an interest in real property to compel a partition.”  Further, when a party seeks partition, the trial court “shall determine the share or interest of each of the joint owners or claimants in the real estate sought to be divided, and all questions of law or equity affecting the title to such land which may arise.” If the property is susceptible to partition, then the Property Code requires that the court partition it. If a physical partition is impossible, which is most likely the case with a marital residence, then the court must order a sale of the property and distribute the proceeds of the sale to the co-owners according to their percentage interests in the home.

Further, under common law, a co-owner of real property can assert a claim for reimbursement or contribution. Like reimbursement claims under the Family Code, these claims are equitable claims based on the general rule that because the care, maintenance, upkeep, and preservation of property rests upon joint owners collectively, a joint owner who expends funds for necessary or proper upkeep is entitled to have such expenditures charged to co-owners in accordance with their pro rata ownership. This right to contribution or reimbursement arises when an advancement is made, and interest may be recovered on such advancements from the date they are made. Thus, if Jill pays down the mortgage, pays the property taxes, repairs the property, pays for home owner’s insurance, and pays for routine maintenance on the home out of money she has inherited (assuming it is her separate property), she can ask the court to require Jack to reimburse her for the money spent—including interest—in the amount of his pro rata share of ownership.

A co-tenant may bring an action for an accounting at any time, with or without a suit for partition. In an accounting, reimbursement claims between co-tenants are calculated and allowable offsets are adjusted.

If the court finds a reimbursement obligation exists, it can be enforced as part of a partition action. For example, if the court finds that Jack owes Jill more money in reimbursement than the value of his portion of the home, the court has the authority to award the home to Jill and adjust the equities between the parties without selling the property.

Although these partition and reimbursement claims are similar to Family Code claims, there are some differences that give courts and parties more options to determine whether the house is yours, mine, or ours.

Jodi Bender is a Partner at Duffee + Eitzen, LLP and can be reached at jbender@duffee-eitzen.com.

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