How to Deal with a House in a Divorce

Published October 19, 2012 | By

A common issue in most divorce cases, along with a long list of other issues that must be dealt with in a Texas divorce, is what to do with the marital residence.  If the parties rent their residence this is not a big issue, but in most divorce cases there will be owned real estate that must be dealt with.

Two Most Common Ways to Handle

While every case is different and there are many unique and unusual sets of circumstances, for most cases there are only two realistic divorce outcomes when it comes to the house. Either the house gets sold and the proceeds from the sale split (usually on some percentage basis) or either the husband or the wife is awarded the house along with the debt attached to the house.

What About the Equity?

When one spouse is awarded a house that has significant equity the other spouse will want an offset from some other asset.  As a simple example, let’s say a couple has a house with $100,000 in equity and their only other asset is a 401k account in husband’s name worth $100,000.  If wife was awarded the house and husband was awarded the entire 401k account, it would be a 50/50 property division.  If instead neither party wanted the house and they put it on the market they could then split the net proceeds from the sale of the house 50/50 and also split the 401k 50/50. That would also be a 50/50 division.

What Real Estate Documents are Used to Transfer the House?

If instead of selling one spouse is awarded the house then in a typical case this requires just two real estate transfer documents. These should normally be done at the time of divorce along with the Divorce Decree and other transfer documents.  The first document is a “Special Warranty Deed.” This document is signed by the spouse who is not getting the house and in effect it says that the other spouse is now the 100% owner of the house (subject to the debt secured by the house).

The second document is a “Deed of Trust to Secure Assumption.”  This document is signed by the spouse who is getting the house and in effect it is that party’s promise to pay the existing mortgage in a timely fashion.  If the party who receives the house falls behind on the mortgage payments or in any way defaults on the mortgage, the Deed of Trust to Secure Assumption gives the other party certain recourse against them.  The details of that potential recourse are spelled out in the language of the Deed of Trust to Secure Assumption.

Divorce Transfer Does Not Remove Name from Mortgage

One important issue that is often misunderstood concerns the existing mortgage.  In the scenario described above, the mortgage that is held in both parties names stays in both parties’ names, even after divorce.  Parties sometimes assume that because they have agreed for one party to solely assume responsibility for the mortgage that this agreement is binding on the lender and all they need to do is call the mortgage company to get the name changed on the account.  Not so. The lender will always refuse to do so.

The only way the other party will be relieved of that liability is if the mortgage is paid off, either by refinancing it or by selling the property.   In other words, the debt will remain on the credit report of the non-owning spouse until the debt is paid off. If the owning spouse goes into foreclosure then that will impact the credit of not only the owning spouse but also the non-owning spouse.

The bottom line is that if your spouse is being awarded the house in your divorce case, it is very much preferable if at all possible to have them refinance the property in their own name.  Usually the refinancing can happen prior to divorce (or at least pre-approval obtained prior to divorce) or within a set deadline that is included as a term of the Decree.

I hope this helps clarify the issues surrounding how to deal with a house in a divorce case.  If you have questions or comments please feel free to share them below.

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Scott Morgan is Board Certified in Family Law by the Texas Board of Legal Specialization. He is has practiced family law since 1994 and is the founder of the Morgan Law Firm which is dedicated exclusively to representing divorce and family law clients in the Houston and Austin areas.

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19 responses to “How to Deal with a House in a Divorce”

  1. My soon-to-be-ex-wife and I are trying to find the best way to figure out the value of our assets. What’s the best route for trying to find the true value of your stuff? Your site has been very helpful, but I just want to move forward in the right direction.

    • Best of luck trying to make an amicable split. These times are rough. Next time, I won’t be rushing into marriage… but at least I know a good divorce lawyer to make the process a little smoother. You don’t want to hire a lemon. The worst!! Thank you for all the help Scott!

  2. My ex-husband and I were able to find a good realtor to help us sell our home. It was a lot faster of a process and was nice to have a middle-man to deal with us. I feel bad, though, cause I’m sure we did make her FEEL like she was the middle man. Yay for messy divorces, but we ended up diving the money down the line.. right down to the last cent. It’s about as fair as we could get. It worked for us.

  3. I wonder if it’s just easier for me and my husband to just split things the way we see fit and pay the difference. Like if he keeps the car, but I take the house… and I just pay him my difference in the house or trade him for another possession… is that best. Or is it better just to sell everything and split the cash?

    • Natalie, usually all the assets are not sold. Most of the time there are one or two assets (like a bank account or 401k) that are divided on an uneven basis to even out the total division to the agreed percentage.

  4. In 2004 my daughter and her husband built a beautiful home in a rural community. Since that time, their marriage has continued to deteriorate to the point where there’s no way they could sell the property for what they still owe on it. Knowing my daughter would be leaving him as soon as she graduates from college, my son-in-law stopped making the payments which my daughter couldn’t afford to make on her own. As a result, they received a foreclosure notice earlier this week. I can’t help but wonder how the house will figure into their divorce decisions.

  5. So then what is the recourse if the ex that was awarded the house does not refinance the house within the timeframe alloted by the divorce decree in the situation where a Special Warranty Deed and a Deed of Trust to Secure Assumption were used?

    • Hi Ed, the answer depends on the specific terms stated in the Decree. Typically the language would include a default provision that allows the non-owning spouse to place the house on the market for sale. A court action for enforcement of the order is also a possibility. This can get messy so before you take any action I would encourage you to consult with a good family law attorney about how to proceed.

  6. Sure wish my husband could’ve happened across your website prior to the divorce from his ex-wife, who went against a court order within the divorce decree (which she signed and initialed) stating that she was required to show up in the lawyer’s office within 30 days after their divorce was finalized, in order to sign the Warranty Deed and Deed of Assumption for the home she was awarded in the divorce. She refused to sign the documents after the divorce, then became seriously delinquent with the home mortgage (probably knowing what would happen, as she works for a large bank’s mortgage dept.), and my husband had to hire ANOTHER lawyer to persue her yet AGAIN years later. The new judge required that she sign the documents right then and there. However, my husband and I are now unable to obtain the dream of owning our OWN home due to the mortgage delinquencies still showing up on his credit report, although the account is no longer in his name. And to top it off, the creditor is now refusing to speak to him about the account history on his credit report, because his name is no longer on the account. Such a fiasco! Goodness, I wish he could’ve come across this site way back then. Guess we’ve gotta wait 7 years. smh

    • Hi Chanel, I’m sorry to hear about your situation. Unfortunately that is not an uncommon situation over the past few years with bankruptcies and foreclosures on the rise. Your husband’s situation is a cautionary tale for anyone getting divorced about the possibility of their ex getting the house and then defaulting on the mortgage. If the property is not sold or refinanced and the mortgage is not paid on time it will definitely impact your credit. After that happens there is no magic fix, you just to work on improving your credit score as time passes.

  7. Hi! I have a question.

    I was divorced in 2012 and my home was foreclosed on in 2012 as well. The mortgage was only under my name and the deed was under both my name and my ex-spouses name. The court order indicates that the residence was to be sold and assets split in half however, the home was foreclosed on prior to finding a buyer. The decree states that any asset or debt that came from the home was to be split between both myself and ex.

    My question is regarding filing of my taxes for 2012- the remaining debt or “cancellation of debt” of lets say $50k from the foreclosure of the residence–is that amount to be split between both myself and ex (25k each) or since the mortgage was soley under my name am I to take the sole burden of the $50k when filing my taxes? If it is to be slpit, how would I go about filing it or having my ex filing the other half?

    Thanks so much in advance!

  8. Scott, I was divorced and awarded my house in the settlement. I was told by my lawyer that the only way to remove my ex from the loan was to re-finance. Why is it that the option of mortgage assumption is not brought up ever? I have an FHA loan and I am able to assume all of my mortgage through Wells Fargo to avoid my interest rate rising in a refinance.

    • The terms “mortgage assumption” and “refinance” are commonly thrown around a bit loosely. For mortgage professionals these terms may have specific meanings but for the purpose of a divorce case the real question is whether the person awarded the property will be required to replace the existing loan (which obligates both parties) with a new loan that no longer obligates the non-owning spouse. Often I have had clients say that the existing mortgage lender would remove the non-owning spouse from the debt but what they really meant was they would do a standard refi with the usual closing fees rolled into the loan.

  9. Scott.

    Ex-husband is trying to sale our house and found out my name is still on the deed. Can he sell the house without me signing off (quit deed sale, etc.), or is he legally required to split the proceeds (during the time we were married) of the sale? Is there any way he can proceed to sell the house without my consent?


    • Assuming no deeds were executed at the time of the divorce (he should have required you to sign a Special Warranty Deed at that time) then it is dependent on the language of your Decree. A Final Decree of Divorce can pass title to real estate if it is done correctly so it is possible that the Decree gives him sole ownership of the property. However, this may not be enough to satisfy the title company at closing. My guess is you will hear from him (or his attorney) requesting your cooperation at closing and threatening filing a post-divorce action if you refuse.

  10. “What happens when you are awarded a house in a divorce and the ex is award the debt and refused to pay and it foreclosed on! Is there anyway to hold him or her responsible”

    • If your husband executed a Deed of Trust to Secure Assumption at the time of divorce (normally done at the same time you execute the Special Warranty Deed) then you have certain enforcement rights under that document. Review the terms of the Deed of Trust to Secure Assumption and get an attorney to advise you on your specific rights under that document.

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