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Splitting a residence when a marriage ends

When a couple in Texas decides to end their marriage, they might not be sure how to handle ownership of home and the associated mortgage. In some situations, a former couple might opt to sell a property and split the profits after a divorce. However, another option is for one partner to buy out the other person. Although this can work well in many situations, the couple will need to agree on the value of the residence and work out the division of their debt.

When a couple enters into a divorce agreement that awards the ownership of the former couple's home to one party, the other party is not automatically released from liability for paying down the mortgage. The lending company will still show that both parties are responsible for the loan because the couple applied for and signed to the terms together. When this occurs and the spouse who keeps the residence struggles to make payments on the home, it negatively influences the other person's credit. However, if the person owning the home refinances the mortgage after the end of the marriage, then the other party might be freed from liability.

In some cases, a former spouse might seek reimbursement for his or her share of the down payment on the home. However, the property might no longer be valued at what it originally cost, and the refinancing process might not provide enough cash to settle the amount sought by the individual no longer living in the home. When this occurs, gift funds provided by relatives can be used to make up the difference.

The buyout of the family residence during a divorce can be complex and is only one of many issues a couple might need to consider the divorce process. However, a lawyer could help a client understand the different rights and obligations he or she might have throughout proceedings and might provide representation for that client in negotiations with the other party.

Source:, "How to Divide Your House in a Divorce", Scott Sheldon, July 09, 2014

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