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San Antonio, TX Family Law and Military Divorce Blog

Wednesday, May 20, 2015

Buy-Out of the Other Spouse's Interest in the Home in Divorce

In divorce, what should the divorce decree say in order to facilitate one spouse's buy-out of the other's interest in the community property homestead with proceeds from post-divorce refinancing?  The decree should include all of the following:

  • State the legal description of the property and divest the non-owning spouse of title convey sole title to the owning spouse;
  • Award a money judgement to the non-owning spouse for his or her share of the equity (i.e. the buy-out amount);
  • Secure the money judgement (i.e. the buy-out) by placing an owelty lien on the entire property;
  • Order the owning spouse to be solely responsible for the existing mortgage;
  • Order the owning spouse to execute a real estate lien note and deed of trust to secure owelty of partition in favor of the non-owning spouse; and,
  • Order the non-owning spouse to execute a special warranty deed with encumbrance for owelty of partition in favor of the owning spouse.

With these structures in place, the owning spouse--after the divorce has been finalized--may now refinance the property solely into his or her name and use proceeds from refinancing to pay-off the money judgement/note.  Making this happen, of course, rests on the assumption that the spouse who will receive sole title can qualify for refinancing and sufficient equity exists to execute the buy-out.  Once everything has been completed, the non-owning spouse's name is off the deed and mortgage.  Anyone considering this option should speak with both a qualified divorce attorney and qualified mortgage broker experienced in divorce refinancing.

 Author Jim Cramp is a retired active duty colonel and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


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