Austin Divorce and The Marital Home

An Austin Divorce is agonizing! It’s likely that your mind is filled with doubts about the future. Divorce combined with mortgage Foreclosure is a vicious disaster. It’s in these times that you need to deliberately force all your wits towards being alert for making pragmatic financial decisions, that can help make it through.

For the benefit of my readers in Austin, Texas, I would like to touch upon the questions that commonly prevail among partners who are going through Divorce. The options that are recommended in this article will help you handle foreclosure crisis especially when you are anticipating settlements through a Divorce in Austin.

1. What are my options with regard to the house?

As one of the most valued asset, there are three specific options that couples should consider while evenhandedly settling their finances on the mortgaged house.

Option 1: The most obvious and simplest of all would be to put up the house for sale and fairly divide the proceeds. If you are contemplating to wholly buy out the house from the divorcing partner, its better you assess your financial competency. Few of my neighborhood Texas friends with their decent monthly salaries, have found it almost impossible to buy out the lofty equity from their houses. The mortgage principal is often a substantial amount, that you might end up loosing your entire savings and surplus, for the gain of just equity stake over the house. While I’m going to touch upon buy-out equity as a separate option, I would recommend to my Texas readers, to either have a strong finances to purchase the house or sell the home and divide the proceeds equitably. This option can save couples from loosing their house from an embarrassing foreclosure in Austin and in the meantime, bring in funds (on sale) that can relive their financial stress.

Option 2: As a partial owner of the house, you can buy-out the ownership rights of the divorcing partner. As mentioned, it’s mandatory you review your finances to purchase the entire equity. Instead of giving up the house to foreclosure or market sale, the partner interested to retain the asset can compensate their divorcing partner of their equity share and procure complete ownership. If you do not have the compete funds, you could think of Mortgage Re-finance as an option to help you procure the equity rights. Bear in mind that Re-finance has supplementary miscellaneous costs like title costs, a new survey, fees recording fees, and attorney’s fees, ranging from $5000 to $15000, topped over the normal mortgage processing fees. These factors should be considered while choosing re-finance as an option to pay-out your divorcing partner. Though expensive, the Re-financing option is most preferred among couples seeking Divorce in Austin, because it gives them a benefit to start a fresh mortgage loan without their separating spouse’s name on the title.

Option 3: If there are children involved in the Divorce settlement process, I would recommend you go for this option, where you can maintain a status Quo. The Status Quo can be achieved by matured couples, who in spite of the Divorce, negotiate to fully pay for the house until the few years, when their children have grown to Young adults. One of the partners seeking Divorce agrees to move out and wait for a specific term until the house can sold in the real estate market. Maintaining Status Quo can help you reassure you child’s continued education in their present schools, avoid the foreclosure in Austin and freeze immediate sales on the house.

My Texas readers should note that to negotiate mutually beneficial adjustments while seeking divorce requires tremendous amount of maturity and genuine goodwill. It is an effort, if carried out fairly, can make the separation healthy and reciprocally beneficial, especially for the Children who are involved. But legally, it is quite jeopardizing to share ownership with your divorced spouse. Any grievous judgments or liens on the mortgage through your Ex will also warrant you as a Co-title holder.

Mrs. Suzanne Jonathan, mother of two, is one of my good friends living in the Austin, Texas region. In 1997, a catastrophe gusted into their homes, when her husband, Mr. David Jonathan, announced his decision to Divorce her. However, considerate of the implications on what his decision might have on his two kids, he let Suzanne live in their marital house until their children graduated high school. He eventually moved out after legally receiving his Divorce and Suzanne rarely heard back from him. He rarely visited the kids and called on Suzanne to know about her whereabouts. Ten years went by and her kids (currently young adults) are now University graduates seeking for possible employment with the local tech companies. Fulfilling all obligations as a diligent mother, Ms. Suzanne recently tried to touch base with her Ex-husband after almost a decade, to discuss about thesale and settlement of their house. To her dismay, it was revealed that David had died on a road accident. When she set off to local Texas tribunals to seek legal help with selling the house, documents exposed her ex- husband had 12 judgments and liens, including judgments, tax liens, sales tax liens, and surcharges. All these Judgments handicapped Suzanne’s title and she was unable to sell the conjugal home. Such a misfortune!

I do not wish any of my Austin neighbors to undergo a situation that my dear good friend went through. I would not recommend you to maintain Co-ownership of your home after divorce in Austin. Any Liens obtained by the faulting ex-spouse can ruin innocent spouse’s credit score, Limit the spouse’s refinance options and ultimately generate enormous aggravation.

If situation thrusts you to maintain a Status Quo, please be sure to regularly monitor the status of your title. Also regularly stay linked in with your Ex-spouse, to learn about his or her whereabouts, financial stability and any judgments that may be active on them.

2. When is the marital home considered to be marital property?

In Many Divorce Cases in the Austin, Texas Region, the marital home is regarded as the most valued asset by couples. In Generic terms, if a Home was acquired “during the course of marriage” then it is treated as a joint asset that is subject to equitable share. If in any case, one of the Spouses owns the housing asset prior to their marriage, then the courts would treat the asset as a separate possession of the initial owner and the property cannot be claimed for mortgage settlements when seeking divorce.

3. My marriage is a disaster. I fight all of the time with my wife and I want to get a divorce. Should I move out of the marital residence

“Should I move out of the marital residence?”
Before pondering over this question, you need to look into the factors that contribute to the factors of your divorce. If your marriage has lost all essence of love or if you are tired of being with your partner, it would be better for you to move out to a separate portion within the house, than to stay fully away from home. But if you have a record of ‘domestic violence’, then I urge you to leave the marital home.

Domestic Violence is a core setback for thousands of Divorce cases in Austin. Every Texas daily editorials, Local Television Channels and web articles throws into the limelight about several murders committed against spouses. In case of violent behavior, it’s better for the spouse to move out of their marital home, than to fall prey of any brutal actions. If the violence is recorded, the family court processing the divorce in Austin will order one of the spouses to leave the marital home. However, if the Court perceives that the reason for legal separation is just miserable, they may order the spouses for mutual partition of their marital home and live in but within their portion, until divorce is fully settled. The most hectic divorce cases in Austin are with couples who live within their portions but together in the marital home. With the Divorce proceedings being processed, it’s frequent for one of the spouse to explore new relationships. Once the discarded spouse discovers about the new dating partner, they may get furious enough to open a new can of issues to the already filed divorce case. Dear Texas readers, if you are heading for a divorce in Austin, I request you keep it as civilized and mature as possible. It will go far in saving your house and your assets.

Another question that recurs with our Austin clients is that “if my spouse leaves home will that mount to desertion?” My reply would be that it’s immaterial. A Person filing for divorce in Austin does not require a validated reason to file for legal separation. Hence, if a person leaves the marital home, it’s doesn’t really mean that other spouse has an edge in the asset.

4. I have just purchased a beautiful new home with my wife. I have paid the entire $20,000 deposit with my own money that I earned prior to the marriage. Our marriage is a disaster and we are now getting divorced. Is the $20,000 deposit subject to equitable distribution?

This scenario is something that I’ve frequently observed with local Austin divorce cases. When couples are in love they assume their relationship as “eternal” and seldom think of financial implications that are associate to divorce. In a few situations, just one of the spouses accepts to pay for the entire deposit with their premarital funds. If the divorce is filed and the house heads for an Austin foreclosure, the initial deposit (which is not a part of the martial estate), is often claimed above the equitable settlements. The Legal response for these claims may leave the reimbursement seeking spouse gasp with a shock.

The legal laws, state that if the spouse willing accepts to pay the deposit to purchase the marital home and share the title with his marital partner, then the initial deposit will be treated as gift and cannot be claimed back. The entire down payment will be treated as a marital property. If however there is a prenuptial agreement in place, the entire deposit amount can be claimed.

If you think your deposit towards the down payment is significant, I would recommend you negotiate with your spouse on the need to have prenuptial agreement documented. This can ensure fair re-imbursements in case of a divorce in Austin. All contributions towards the deposit will be legally reimbursed to the relevant spouse, when the conjugal asset heads for a foreclosure or is sold.

5. I owned my home prior to the marriage. Once I became married I placed my wife on the deed with myself. Is the marital home still considered to be a joint asset even if the marriage was only of a short duration

When a person owns a home prior to his marriage but during the course of marriage legally transfers the title to his spouse, the equity in the house is permanently shared. The court will treat the equity transfer as a gift and convert the status of the estate as joint or martial asset. In the event of divorce all proceeds from the foreclosure or sale of the house will be equitably distributed between the divorcing couples. However, since your marriage was only for a short duration, the court may consider giving you an additional credit for your contribution (which is not the case for marriage that lasted for a longer duration).

6. The mortgage payments for the marital home are ruining me. The stress caused from paying the high mortgage payments is one of the main reasons why we are getting divorced. Can I request permission from the court to sell the marital home even before the divorce in Austin is finalized?

Financial Stress is one of the more prevailing reasons for marriage to head for divorce in Austin, Texas. High Mortgage payments and oppressive property taxes then throw in massive bulks of stress that couples face with divorce and you have recipe for bad decisions in regards to dealing with their house.

I know of few couples in Austin, who believe selling the home and settling financial disputes is necessary even before the final verdict of the Divorce petition. In Rare circumstances, the court also agrees to approve the joint plea and grant a motion to the sale the marital assets. In another event, if one of the spouses can prove to the court that the marital home is heading for a foreclosure in Austin, the court may try to prevent this occurrence and grant a motion to force sale.

It’s a general rule that the home should not be sold during the processing of the divorce case. But if there are valid financial reasons that can be demonstrated to the Judge, he may treat your case as an exception and allow the sale before the divorce verdict.

7. As part of the divorce settlement my ex-wife was given the marital home. As a result of this transfer am I now automatically taken off of the mortgage as well?

If you think a transferring the deed to your spouse, will relieve you from your mortgage instrument as well, then I am sorry to inform you that are completely incorrect. The mortgage is an independent document and in no way is related to the deed. Even when the title of the marital home is transferred, the mortgage instrument is still valid and the divorced spouse is still legally obligated as a mortgagee. There have been Austin couples that were unaware of their mortgage responsibility only to who find a bombshell once they have received a Travis County foreclosure notice or complaint on their credit report.

Bankruptcy is supposed to be first entry on a credit report, which is closely followed by foreclosure. When a Austin foreclosure complaint is entered into the credit report, it would eventually ruin the credit score. Many Spouses, who have moved out with an assumption of being released from the mortgage instrument, find it challenging to redraft the loan amendment when the foreclosure complaint is already initiated by the lender. It’s becomes to late a situation to secure your credit score.

To avoid uncertain blow of this kind, it is crucial that the divorced spouses ensure that the new title owner refinances the house so to also take complete responsibility of the mortgage. This will guarantee that the spouse, who is giving up the title and moving out, is also legally being released from the mortgage instrument. If re-finance is not a preferred option, you may persuade the divorcing partner to fully complete the legal document called “assumption agreement”. This will make the lender to load all mortgage responsibilities on the spouse who is continuing to live in the house and they would be the sole proprietor liable to handle foreclosure situations.

Assumption agreement is a very intensive document that is quite long an application. While considering your request, the lender will evaluate if the Loan to Value (LTV) is high. If there is a sufficient equity on the marital home, the lender will carefully consider in favoring the request and eventually release the spouse from the mortgage instrument. However, a spouse will not be removed from the instrument, if the lender finds there is no sufficient equity in the marital home.

3. I am selling my share of the marital home to my wife. What are my tax consequences from this transfer?

Internal Revenue Code Section 1041, titled “Transfers of Property between Spouses or Incident to Divorce,” states that provides that where property is transferred to a spouse or a former spouse - if such transfer is incident to the divorce – then no gain or loss will be recognized by transferor/spouse. Since there are no capital gains, there will be no federal tax owed by the spouse who transfers the title share to the other. The spouse who takes responsibility as the sole owner of the house would be made liable of all tax consequences cropping up from the house asset.