Legal Question in Family Law in Texas
If the home has no equity built up and if sold, the seller may have to take money to the closing, how does that affect the settlement in a divorce? If one party remains in the home and continues to make payments and sometime after the divorce settlement, the home is sold and a profit is made, does half of the profit go to the other party? If the home is not sold at the time of divorce with the above mentioned condictions, is the party remaining in the home under any finanical obligation to the other party, concerning the home?
1 Answer from Attorneys
Whoever gets the home in the divorce gets the debt and the equity. If both parties' names are on the debt and the house is sold for less than is owed, BOTH parties may be liable for the deficiency or, if the lender forgives the deficiency, BOTH parties may have a tax liability for the forgiven deficiency.
The divorce should award the house to one party. The party who is getting the house should be required to sign a "Deed of Trust to Secure Assumption of Loan". The party losing the home should be required to sign a "Special Warranty Deed." The party getting the house should be required to refinance the other party's name from the debt within 90 days or so. The decree should allow the party losing the house to ask the court to appoint a receiver to sell the house if it has not been refinanced within the agreed time period.
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