In the first episode of our “Real Estate In a Divorce” series, Jake Gilbreath and Brian Walters discuss what happens to the family home in a divorce as they explore the factors that influence the court’s decisions under Texas’s community property laws.
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Jake Gilbreath: All right, well thanks for tuning in to For Better, Worse, or Divorce Podcast, where we provide you tips and insight on how to navigate divorce and child custody situations. I’m Jake Gilbreath, I’m joined with my law partner, Brian Walters. And today as part of our real estate in divorce series, we’re going to be discussing what happens to the marital residence or family home in a divorce. Who might be entitled to the house while the case is pending, which is a very common question that we get. And then of course, what happens to the house at the end of it. Either through mediation, or an agreement, or a trial that the judge has to decide.
So let’s talk about the first question now. Who stays in the house while a divorce is pending? I think it’s fair to say that in all situations, the lawyers are going to try to work out an agreement, or a judge is going to make orders that has the parties not living in the same house together. In theory, people can agree to stay in the house together while divorce is pending. I’ve seen people do it. Brian, I’m sure you have seen over the years people do it or try to do it. It seems like a recipe for disaster in out of 100 cases. And certainly, the parties are welcome to agree to it. But if they go and talk to a judge for what happens to the house while a case is pending, the judge is going to make orders that do not have the parties living in the same residence while divorce is pending.
And that’s going to be done through a mechanism called temporary orders. We’ve talked about temporary orders in other podcasts. Temporary orders are orders that parties can either agree to or if they can’t agree, a judge makes decisions. But they are orders that are set in place while a case is pending. So Brian, if somebody comes to you, and sometimes we see where people are already separated. They’ve moved out. Somebody’s got a place or they’ve figured out what they’re going to do with where they were living at the time before the divorce was filed, but oftentimes not. Oftentimes, people are still living in the same house together. I’d say more often than not people are living in the same house together when the divorce gets filed. So what happens to that situation?
Brian Walters: Well, I have to give them the worst answer possible, which is it depends. But I think that in most cases, we could say this is what’s very likely to occur. So I think this is how judges think about it. Number one, like you said, they want people separated. And why is that? They don’t want conflict. They don’t want the police called. They don’t want somebody getting hurt, or shot, or whatever. And if there are kids, they don’t want the people arguing with each other or even having a tense situation. Even if they’re not openly arguing, kids are pretty sensitive to that stuff.
So generally speaking, I think there’s two situations. There’s when there’s kids and there’s not. So, if there’s no children, then the focus generally I think on a court is thinking ahead of who’s going to take best care of this house and who’s going to end up with the home ultimately. Most likely, either because it’s someone’s separate property or because somebody’s going to be in a better position to afford the house. Especially if somebody ends up keeping it and essentially is buying the other side out. So that’s typically the thought process. I don’t want this house to be damaged. I want to make sure the mortgage is paid so nobody’s credit gets hurt. And if mom is the one who seems like she’s going to end up with the house, and generally that means because they have the income and desire to keep the house after the divorce. Again, they’re going to have to buy the community portion out from the other side, then they’ll probably let mom stay in the house.
If there are children, it’s a different thought process. And the court in that case is going to think about the kids for the most part. They’re going to think: What’s going to be the least disruptive to these children? And generally, that’s going to mean if there’s a primary parent, which if you go to court, the court’s essentially got to pick that. Then the primary custodial parent is going to stay in the house during the divorce in most cases because that means the children don’t have to move and they’re going to spend most of their time in the house they’ve been used to living in. Whether that’s for the past six months or 10 years. That’s usually the way it goes.
There’s certainly specific situations that I’ve seen that are different, but that’s the way 95% of the cases are going to play out. Has that been your experience? And then maybe you want to talk a little bit about the unusual set of circumstances that sometimes arise.
Jake Gilbreath:Let’s say dad’s the primary caretaker and he’s going to have custody while the case is pending. It would be really rare that in that situation a judge would say, “You get custody. And by the way, we’re going to move you and the kids out and y’all are going to stay somewhere else while the case is pending.” Or reverse the roles, be that with mom or whatever, the judge is not going to want that. Again, it’s hard to even think of a scenario where that would not be the case where the kids aren’t staying in the house. And it’s important to remind clients that is not necessarily what’s going to happen at final. But remember, temporary orders are about maintaining the status quo and maintaining stability as much as possible – as much as it is practical.
So sometimes you’ll have a client and again, let’s just pick roles. Let’s say mom’s going to have custody of the kids, but let’s say the house is dad’s separate property or some of his separate property in the house. And so we know that the house is safe. It’s dad’s separate property. We know he’s going to get it at the end. It’s going to be confirmed, but that doesn’t necessarily mean while a case is pending that a judge would be kicking mom and the kids out. That’s just a conversation we sometimes have to have with clients. We know at the end of this that the house is going to go to you. But while this is pending, the judge is going to have as few changes as possible for those kids.
But on the reverse side too, if you’re representing mom in that scenario, you might want to tell her, “Look, we know that the house is going to the dad at the end. It’s his separate property and it’s going to him.” Or maybe it’s a situation of again, we’re just picking these roles for the scenario, “Mom, we know that for whatever reason, the facts are that you’re not going to be able to afford to stay in this house. We know that you’re going to want to move out and get a different place. Hey, go ahead and start looking now. Go ahead and start thinking about moving out. It doesn’t have to be tomorrow but start thinking about moving out.”
A benefit to that for clients, let’s say if I’m in the house, the kids are living with me primarily. I know that I’m not going to be staying at this house at the end of the divorce, so eventually I’m going to be moving out. Well, it makes more sense to move out while I’m married than six months after I’m divorced because if you think about it, the community is going to be paying for expenses while the case is pending, while I’m still married. So I would want to be spending community funds to move out of the house, get a new place set up, buy furniture, do what I need to do, as opposed to waiting six months after a divorce where I’m spending my own money to do that.
That’s one of many scenarios to sort of try to think long-term whenever figuring out what we’re going to do. We want to maintain stability, but you also want to sort of strategize about long-term. So that may be a scenario where maybe a judge wouldn’t necessarily order it. But you may be thinking, even though I’m primary caretaker, the kids are going to be living with me primarily, we need to go ahead and start thinking about moving out. Because practically speaking or legally speaking, if the house is separate property I’m going to have to move out of this house, and so I’m going to get ahead of the game and go ahead and do that. And the other thing to think about, Brian, you’ve seen people talk about selling a house, going ahead and getting the house sold while the case is pending as opposed to waiting until after the divorce is over.
Brian Walters: I think that’s often smart if that’s ultimately what’s going to happen. And again, you might do it in a controlled manner and say, “All right. We’re not going to list it for six months, or nine months, or something.” But we know that’s what’s going to happen. It’s a lot easier to divide up cash at the end of a case than deal with an unsold home. We don’t know what it’s going to sell for. We don’t know how long it’s going to take to sell. What about repairs during the case, et cetera? I think all that makes sense.
However, I’ll say this, if one side wants to sell the house and the other doesn’t in the middle of the case, it’s not going to happen most likely. Judges are very unlikely to order the sale of a house over somebody’s objection because there are 101 ways to undermine that sale. And then you guys are going to be back in court two or three times arguing about whether you should give a $5000 credit to this person for roof damage, and judges hate that, and they don’t want to deal with it. So you’re not going to have that happen most of the time.
Jake Gilbreath: I guess let’s talk about one last thing before moving on to final disposition. I’ve never seen a judge order it, but I have seen people do what’s called nesting while a case is pending. It’s frankly not my favorite thing because just from our clients it’s a huge pain. The idea of nesting is while a case is pending and because we don’t want to disrupt the kids, we’re going to leave the kids in the house and then we’re going to figure out a possession schedule. It wouldn’t make sense to nest if you didn’t have minor children. When it’s mom’s time, the kids are going to live with her primarily. But whenever it’s dad’s time, he’s going to move out, or he’s going to be in the house and mom’s going to move out and vice versa.
You see that a lot, particularly when people want to do a 50/50 schedule. Let’s say if it’s a week on, week off and it’s a situation where there’s a mom and a dad. Mom is going to be in the house for a week with the kids. Dad will go stay with a buddy, or studio apartment, or something like that. And then whenever it’s dad’s time with the kids, he’ll move in. Mom will go stay in the studio apartment, or with a friend, or something like that. I’ve even seen people have a shared apartment, so whenever it’s not your week with the kids, you stay in the shared apartment. And then whenever it’s the other party’s time, they go in the apartment.
That seems like a bit much when you’re going through a divorce to still share space and what have you. You can get creative if you don’t particularly want to get out of each other’s hair while a divorce is pending, and you are getting along okay and don’t want to disrupt the kids. That’s a way of thinking about it, but there’s lots of options by agreement. If you go to court, a judge, most likely is going to say, “One of y’all has got to move out.” It’s hard to even think of a scenario where this wouldn’t be the case. If there’s kids, here’s the possession schedule and what we’re going to do with the kids. So I guess on that, Brian, a question that we often get is: “Am I hurting my case if I move out of the house before we figure out what we’re doing with the house in my divorce?”
Brian Walters:It depends again. That answer is like: “How much is this case going to cost?” It depends. I wish I could give better answers to some of these things. So I’ll break it down into two parts again whether you have kids or not. So, if you don’t have kids and the house is essentially just an asset. It’s either somebody’s separate property or whatever the case is. You’re going to have to deal with it at some point. I don’t think it matters who moves out at the beginning because it’s just a way a court, if you ever get there, is going to be. It’s just an asset just like a retirement account, or a bank account, or a car. There’s no emotional attachment by a judge to your house.
So, if you are ready to split up and move on with your life and you think you’re still going to keep the house and the other side won’t move out, I think you could move out. Get yourself an apartment or rental home, and still have a just fine chance of keeping the house if that’s what you want to do. However, if there are kids, I think it’s a different set of circumstances. If you move out of the house, you leave the kids in the home and you go live at an apartment for four months and see the kids occasionally on Saturday you’re probably conceding custody at that point. I don’t think that makes a lot of sense.
Now if you’re in an abusive situation or high tension and you’re about to file and you need to get out of the house because your spouse won’t move and you don’t want the police to be involved, or you don’t want to get hurt, by all means, get out of the house. File for divorce, get into court as soon as possible. Create a paper trail, text, emails, whatever, with your spouse saying, “I’m moving out so there’s no problems in front of the kids, but I want to see the kids. I want to have them as much as possible.” I think in that case, a court would not view that as anything other than the right thing to do and you’d be fine. I don’t think you’ll hurt your custody case. So don’t put yourself in danger just because you’re worried you might impair your custody case a bit. There are ways to be safe and not do that.
Jake Gilbreath: And that’s a whole different podcast and discussions to have with protective orders and ex parte protective orders. And if there’s a violent situation, there may be a situation where the court can kick somebody out of the house. If it’s not physical family violence and maybe you can’t get an ex parte protective order, there’s still situations where it may be appropriate. Maybe after consulting with a lawyer it may be appropriate to have the kids and maybe go stay with a relative. It’s just that every single case is different and it’s important to sort of first, think strategically, think long-term. Safety is always first, your safety, your kids safety is always first, but talk to a lawyer about it.
But I agree with what you said, Brian. If there’s not kids, if you’ve moved out, then you can start a claim for the house. Now maybe it creates a logistical issue at the very end that may sway a judge if everybody’s saying, “I want the house,” and one person’s moved out, that could have an effect. Again, every single case is different. Following up on what you said about with the kids situation, I tell people as awful as it is may be with us all still being in the same house together, because again, referencing our series on protective orders, you can’t kick somebody out of the house unless there’s an ex parte protective order. You can’t kick somebody out of the house with a restraining order. It has to be because of family violence for specific situations that a court enters an ex parte protective order to kick somebody out of a house.
Sometimes since everybody’s living in the same house before a judge on temporary orders or get an agreement on it, that could take a couple of weeks sometimes. I have people tell me all the time, “Look, I’m fine with the other parent having custody. I just want a visitation schedule, so I’m going to move out.” And I generally tell people in that situation be careful. Obviously, if you think that is in your kids’ best interest that the other side have primary custody, that’s fine, but get a possession schedule in place first before you move out. I’ve had too many times over the years that somebody moves out, they write their spouse, or the mother, or father of the child, and say, “Okay, what’s the possession schedule? Or this is what we talked about.” And they get back a, “I’m not going to let you see the kids.” Or you can see the kids on this very restricted deal.
Say that you have already moved out, now you have to go talk to a lawyer and file for divorce, then you have to get a temporary orders hearing scheduled. And then maybe that temporary orders hearing gets rescheduled, or there’s a lawyer on their side has a conflict, or the court doesn’t reach you. And then you go weeks and weeks and weeks without seeing your kids because you moved out and then you don’t even have a possession schedule. So I do encourage people to work out these temporary orders as soon as possible, but you could be setting up a bad situation if you move out without having a set plan in writing in place. It all goes back to the same though. Talk to a lawyer and have a plan in place before making that decision.
And then thinking about sort of final. What types of things does a judge take into consideration whenever I’ve got a house at the end? A lot of times, it’s everybody’s primary asset, it’s where most of their worth is built up. What do I do with the house in a divorce? Who gets the house? I know we could talk about this for 45 minutes. So what’s the much broader version of it?
Brian Walters:Yeah, a brief version is if it’s somebody’s separate property, and that means that they owned it before the marriage, which is common, or they were gifted or inherited a house, which is rare. If it’s separate property, the court doesn’t have a choice. They have to give it to the person whose separate property it is. So if the wife owned the house before the marriage, there’s no debate. She gets the house. There might be some claims against it or that kind of thing financially, but she’s going to end up with the house.
More commonly is they’ve purchased the house during the marriage. And there’s kind of two choices. You sell the home and split the equity in some manner, 50/50 or whatever percentage gets you to the overall percentage that you want. Or somebody stays in the house and buys the other one out. That’s real tricky right now with interest rates being where they are, being much higher. You’d probably be looking at 7% to refinance versus you may be carrying a 3% note on your house, so that’s going to be a real bad business deal to do that, but that’s an option. You could pay them out over time, $5000 a month until the payout is done. That’s got its own issues. But those are really the two choices, sell it, split it, or someone keeps it and buys the other side out.
You can get creative about that. You can do that in a number of different ways. I’ve had people say, “Well, I’ll live in the house for another year and then we’ll sell it,” or things along those lines. But those are really the two most common choices if it’s not separate property.
Jake Gilbreath: Yeah, I think that’s right. And there are a million different ways you can think of being creative. But ultimately, like you said, Brian, the easiest thing in the world is just to sell it. And then we have agreements about how we’re going to deal with the sale, who the realtor’s going to be and how we’re going to split the proceeds. That’s the easiest thing. The best part is you don’t have to argue about what the value is because the market’s going to tell you what the value is. As much as you may not like your soon to be ex in that moment, people can usually get on the same page as far as selling a house. Because people usually like money more than they dislike their spouse in that moment, and so we’re all motivated to get the highest price for it.
And then on your point on separate property, Brian. If it’s your separate property, it’s your separate property, even if there’s reimbursement claims or what have you. It’s going to go to the spouse whose separate property. A lot of times there will be mixed character for a house so it’s also important to remember that if there is 10% husband’s separate property, 90% is community. It’s important to remember that. Let’s use husband in this situation. If there’s any separate property of the husband in that house, any separate property ownership in it, it cannot go to the wife. Even if it’s 90% community and 10% his separate property, it can’t go to the wife. The court can sell it as essentially a partition between the two estates, and then the husband’s separate property, separate portion goes off the top to him. And then we do whatever the court wants with the community.
But it’s important for clients to remember this is why it’s important to prove your separate property in the house if you have it that the case law. There are cases to this effect that if you have .0005% interest from your separate property in the house because of the Texas Constitution that says the court cannot divest me of my separate property, it cannot be awarded 100% to the other side. It’s going to have to be sold or awarded to me. So that’s obviously proving separate property is important in a house as far as getting that estate compensated for that. It also can be determinative of who gets the house, or at least determinative that the other side can’t get the house if you have separate property.
And then of course, if both spouses have separate property, which sometimes you see, then it’s going to be sold. It can’t go to one or the other, absent agreement. Of course, you can agree to whatever but that’s just scratching the surface of the various different ways that a house can go on a divorce. Again, a lot of the reasons is that’s usually a lot of emotional attachment to it. There’s a lot of logistical attachments to it, particularly if there’s kids. Oftentimes it’s the number one asset, the most valuable asset that people have, and so that’s why we have so many options and different ways that we can deal with it. But that’s a broad view. Obviously, if anybody has any questions or follow-up topics that they want to hear about this particular issue, please just let us know.
That’s what we’re going to cover for today, though. If you like what you heard, do us a favor and leave a review. We always appreciate feedback especially when it helps us better the podcast. Again, if you have any follow-up questions, let us know. You can reach us at podcast@waltersgilbreath.com. You can contact us directly on our website at waltersgilbreath.com. You can of course call the office or email me or Brian. I’m Jake Gilbreath here with Brian Walters. And thank you all for listening.
For information about the topics covered in today’s episode and more, you can visit our website at waltersgilbreath.com. Thanks for tuning in to today’s episode of For Better, Worse, or Divorce, where we post new episodes every first and third Wednesday. Do you have a topic you want discussed or question for our hosts? Email us at podcast@waltersgilbreath.com. Thanks for listening. Until next time.
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