Property separation in Texas

[txjeff]

What is the name of your state (only U.S. law)? TX

The outline

1. In TX, 2004 and earlier. Had mortgage with ex-wife. Got divorced in 2004. Gave ex a cash percentage of part of the profits that would occur in the sale of house at current market value. Title put into my name. Had around 200,000 in 401k assets and a small amount in checking.

2. In 2006, got married a 2nd time. Per TX law, as I read it, money and property that is owned prior to marriage, and inheritance, is considered separate property and shall not be divided, except if I chose to put it in a joint account.

3. 2007, I choose to sell the house and buy a new house of similar value in another TX city due to a job. I profit about 40000 from sale of first house and I choose to put 20 down on new house, or about 20000.

4. The title company, when I question, 'should both our names be on title', since I never sat down with a title company before and typically, in TX, nobody uses a lawyer to buy property. They had a resounding, 'yes' without questioning the source of the money. They merely assumed community property state, yes you both need to be on the title/deed. I took their word for it.

5. 6 years later, I was gifted enough cash to pay off the balance of the mortgage from my mother. Again, I consider that the gift was not necessarily joint money, but, since it was used to pay off the loan on a house mortgage that now had both our names tied to it, I assume this was forced to no longer be a separate thing.


Here lies the question. Should the title company have asked, 'Is the purchase of the house coming from separate or joint money?'

I asked this question of that Title company, and they responded 'I believe I can help you with your questions regarding the purchase of your Meander property. When you purchased this property, apparently you were already married. Now whether or not your lender, Washington Mutual used your wife's credit in order to get the loan from them, she would have been required in the state of Texas to sign the mortgage Deed of Trust. She joined in on the Deed of Trust and is on title to the property on the Warranty Deed.

I'm sure you are aware that Texas is a community property state, which means whether one spouses name is not on title, they still have a homestead/community property interest. The lender instructs the title company how title will be vested, etc. We go by their instructions. Were you married to Valeri when you sold the Hurst property? If you were even though you bought the property with your own money, if she was married to you when you sold the property, she would have had a community property interest in the house. She would have just needed to sign the Deed. She would not have gotten any of the net proceeds of the sale, unless you told your title company to make the check payable to both of you otherwise you would be the only one in title, she would be signing the Warranty Deed out to get rid of any of her homestead/community property interest.

So.. the bottom line is you can buy, buy, buy alone with no spouse, but in Texas you cannot sell real estate without your spouse joining in on the Warranty Deed. With all that being said, if your spouse has never lived in the property you are selling and say it is investment property, then the title company can prepare a Homestead Affidavit for the wife to sign, where she states she does not and has not lived in the property being sold, and her homestead is legal description, street address of where she actually lives, then she will sign the Affidavit and it is filed of record at the same time you sign the Warranty Deed on the property you owned by yourself. The thing about that is it cost more money to prepare the affidavit and file it of record, than it would if the wife just joined in on the Warranty Deed.'

I am still confused and I feel that the commentary I got from the Title company conflicts with the law that states 'separate money shall not be divided' unless I carelessly put it in a joint scenario. Shouldn't a Title company, which has lawyers, warn a person with separate money that, if it is required for real estate transaction to be joint, that there is a risk? Certainly the lender bank for the mortgage didn't ask. I feel like I know have a sizable chunk of what was once separate money that is now at 50 risk. Thanks for helping. Jeff

 

[justalayman]

The title company is not in the business of giving legal advice. The question you asked is one you should have asked an attorney before putting the wife in title along with you. They shouldn’t ask where the money came from since they are not in a position to give you legal advice. I suspect you got a personal opinion of whether your wife should be on the title rather than an answer to a question seeking legal advice. After all, shouldn’t a wife always be in title along with their spouse, at least that’s my personal feeling on the matter

 

[txjeff]

The title company is not in the business of giving legal advice. The question you asked is one you should have asked an attorney before putting the wife in title along with you. They shouldn’t ask where the money came from since they are not in a position to give you legal advice. I suspect you got a personal opinion of whether your wife should be on the title rather than an answer to a question seeking legal advice. After all, shouldn’t a wife always be in title along with their spouse, at least that’s my personal feeling on the matter

Thanks for the reply. I should have mentioned I am now a realtor in TX, but 11 years ago, I was not. I was rather naive about the process but most everyone in TX does not consult an attorney. They go to the Title company and done. And yes, the Title company has a staff attorney that is supposed to advise the legal side.

Secondly, and this was an example I gave the title company and I'm waiting for a reply:

"Here’s what bothers me. Let’s pretend, for the sake of argument, I had a 10 million dollar mansion that I inherited in TX and let’s pretend a gold digger lady becomes my wife and I owned that property 5 years earlier outright. No loan. Now I am selling it and moving into another house in TX, equal value. Half the money that was gained from the sale of that 10 million dollar mansion is now at risk because you are saying it’s a community property state? Or, would I, as in California, I would have to have a Pre-Nup signed to prevent that kind of gold digging?

What troubles me is there is no discussion about pre-existing extenuating circumstances. I feel like not only did I lose half of the profit in a prior divorce (in my real life circumstance), but then I’m later facing losing half of the profit again from the same original home in a second divorce. That seems a bit insane. It seems like real estate is in conflict with the law, which says separate property and money prior to the marriage will not be divided. Why would title and/or warranty deed preclude that?"

Certainly, if it was a single wife circumstance, and non-separate money, I agree with you, but if you work 20 years and save a million dollars; and then 5 years later get married and then buy a million dollar home, why should the money that was separate, prior to marriage have anything to do with a new marriage? That goes for inheritance too.

Per TX law:

There are two types of marital property: community property and separate property. Community property is owned by both spouses equally. In the event of a divorce, community property will be divided equally between each spouse. Separate property, on the other hand, is owned by only one spouse. Separate property belongs solely to the spouse that it legally belongs to and will not be divided between the husband and wife in the event of a divorce. Separate property includes:

Any asset owned or acquired before the marriage took place
Property that was the result of a gift or inheritance
Assets gained as compensation for a personal injury claim (excluding lost wages)
Any property exchanged for another piece of qualifying separate property

 

[txjeff]

The title company is not in the business of giving legal advice. The question you asked is one you should have asked an attorney before putting the wife in title along with you. They shouldn’t ask where the money came from since they are not in a position to give you legal advice. I suspect you got a personal opinion of whether your wife should be on the title rather than an answer to a question seeking legal advice. After all, shouldn’t a wife always be in title along with their spouse, at least that’s my personal feeling on the matter

Also, I forgot to mention, the Title company was so **** sure that "Yes, your wife should be on the title." If there was some question of "well, it depends", and they had no lawyers present, then I would think they should have said, "If you aren't sure due to unusual circumstances, such as, A, B, C, then you should probably consult a lawyer before you close." And I would have.

As a realtor, I find it humorous that in capital letters on a contract above the signature line it says, "CONSULT A LAWYER BEFORE SIGNING". Nobody does. I've argued this with a group of realtors and brokers and they are very resistant in TX to recommend lawyers for any customers. Almost nobody uses a lawyer here.

So there remains the question; If a title company advises poorly, is there any way later legally to repair a deed set up in conflict with the law? Which also lead to added monies inherited compiled on the property, which were also separate monies?

Not that I'm getting divorced right now. It's a matter of principle.

 

[latigo]

What is the name of your state (only U.S. law)? TX

The outline

1. In TX, 2004 and earlier. Had mortgage with ex-wife. Got divorced in 2004. Gave ex a cash percentage of part of the profits that would occur in the sale of house at current market value. Title put into my name. Had around 200,000 in 401k assets and a small amount in checking.

2. In 2006, got married a 2nd time. Per TX law, as I read it, money and property that is owned prior to marriage, and inheritance, is considered separate property and shall not be divided, except if I chose to put it in a joint account.

3. 2007, I choose to sell the house and buy a new house of similar value in another TX city due to a job. I profit about 40000 from sale of first house and I choose to put 20 down on new house, or about 20000.

4. The title company, when I question, 'should both our names be on title', since I never sat down with a title company before and typically, in TX, nobody uses a lawyer to buy property. They had a resounding, 'yes' without questioning the source of the money. They merely assumed community property state, yes you both need to be on the title/deed. I took their word for it.

5. 6 years later, I was gifted enough cash to pay off the balance of the mortgage from my mother. Again, I consider that the gift was not necessarily joint money, but, since it was used to pay off the loan on a house mortgage that now had both our names tied to it, I assume this was forced to no longer be a separate thing.


Here lies the question. Should the title company have asked, 'Is the purchase of the house coming from separate or joint money?'

I asked this question of that Title company, and they responded 'I believe I can help you with your questions regarding the purchase of your Meander property. When you purchased this property, apparently you were already married. Now whether or not your lender, Washington Mutual used your wife's credit in order to get the loan from them, she would have been required in the state of Texas to sign the mortgage Deed of Trust. She joined in on the Deed of Trust and is on title to the property on the Warranty Deed.

I'm sure you are aware that Texas is a community property state, which means whether one spouses name is not on title, they still have a homestead/community property interest. The lender instructs the title company how title will be vested, etc. We go by their instructions. Were you married to Valeri when you sold the Hurst property? If you were even though you bought the property with your own money, if she was married to you when you sold the property, she would have had a community property interest in the house. She would have just needed to sign the Deed. She would not have gotten any of the net proceeds of the sale, unless you told your title company to make the check payable to both of you otherwise you would be the only one in title, she would be signing the Warranty Deed out to get rid of any of her homestead/community property interest.

So.. the bottom line is you can buy, buy, buy alone with no spouse, but in Texas you cannot sell real estate without your spouse joining in on the Warranty Deed. With all that being said, if your spouse has never lived in the property you are selling and say it is investment property, then the title company can prepare a Homestead Affidavit for the wife to sign, where she states she does not and has not lived in the property being sold, and her homestead is legal description, street address of where she actually lives, then she will sign the Affidavit and it is filed of record at the same time you sign the Warranty Deed on the property you owned by yourself. The thing about that is it cost more money to prepare the affidavit and file it of record, than it would if the wife just joined in on the Warranty Deed.'

I am still confused and I feel that the commentary I got from the Title company conflicts with the law that states 'separate money shall not be divided' unless I carelessly put it in a joint scenario. Shouldn't a Title company, which has lawyers, warn a person with separate money that, if it is required for real estate transaction to be joint, that there is a risk? Certainly the lender bank for the mortgage didn't ask. I feel like I know have a sizable chunk of what was once separate money that is now at 50 risk. Thanks for helping. Jeff

So what do you want from here? Just to listen to you trying to pin your problems on a title company or a mortgage lender and selling us on your misguided belief that buyers of land in Texas don't use lawyers.

You admit knowing that a spouse's separate property can be transmuted into community if "carelessly put into a joint scenario"! So why didn't it occur to you that taking title to the property in joint names could be such a "scenario" and that it could be seen as a gift of separate property to the community estate?

And what proof do you have that it wasn't your intention to make such a gift?

Anyway you need to find one of those Texas lawyers that nobody uses.

 

[txjeff]

So what do you want from here? Just to listen to you trying to pin your problems on a title company or a mortgage lender and selling us on your misguided belief that buyers of land in Texas don't use lawyers.

You admit knowing that a spouse's separate property can be transmuted into community if "carelessly put into a joint scenario"! So why didn't it occur to you that taking title to the property in joint names could be such a "scenario" and that it could be seen as a gift of separate property to the community estate?

And what proof do you have that it wasn't your intention to make such a gift?

Anyway you need to find one of those Texas lawyers that nobody uses.

Well so much for "Free Legal Advice", which is what his is supposed to be about.
You don't have to be antagonistic about my discussion.

What I'm telling you isn't misguided. I'm telling you from professional experience now that it is rare to practically non-existent that any real estate sales that I've heard of or witnessed have had a lawyer as part of the process. Most are direct with the Title company.

Also, the point is, most people are like I was 10 years ago. At that time I was not a realtor. I was a person of little experience following the direction of my local realtor who says to just go to the title company and close. Done. I brought up the question, "Should my wife be on the title?" That should have been a signal, "Why would he ask that if there wasn't a reason?" Instead of expanding on that, the reaction was simply "Yes, she should." Rather thoughtless from professionals who probably have seen a variety of circumstances. At age 52, this was the first home I was buying independently in TX with a new wife in tow.

But does that mean the real estate industry can skate the law of separate and common law monies/property by avoiding lawyers? I can't change the past. What is done is done. So, is there any recourse after the fact if misdirected, to repair a poorly arranged deed/title etc after the fact? Or is it "too bad"; you lose.

I don't know what your comment means "what proof do I have that it wasn't a gift"? That's ridiculous. But I understand your point. A judge could argue, maybe I'm lying and I originally intended it to be a gift and now you are saying it never was. Well, I can tell you my wife would stand up for me and would say, "No, it wasn't ever a gift."

So what protection does a man have if he is lead to believe that it's a necessity to have your wife on a Title because "that's how it's usually done" who then finds out later that, "Er, oops, that was not very accurate guidance but, oops, now it's too late because you signed the bottom line".

Believe me, I was faked out on a different kind of contract where I signed with a car sale and realized after the fact that it was messed up. I had to threaten to sue to cancel the contract and get my trade in back. And I did.

Sounds to me that I need to talk with a local lawyer instead of trying to get good advice here.

 

[justalayman]

And yes, the Title company has a staff attorney that is supposed to advise the legal side.

Of all the closings I’ve been involved in I’ve never seen a title company offer legal services to a customer. Their attornies work for the title company and advise the title company. If you want legal services you need to retain your own attorney. Their attorneys would have no duty to you.

As a realtor, I find it humorous that in capital letters on a contract above the signature line it says, "CONSULT A LAWYER BEFORE SIGNING".

As Bill Engvall would say; there’s your sign.

The reason they give you that notice is because they do not give legal advice.

 

[justalayman]

5. 6 years later, I was gifted enough cash to pay off the balance of the mortgage from my mother. Again, I consider that the gift was not necessarily joint money, but, since it was used to pay off the loan on a house mortgage that now had both our names tied to it, I assume this was forced to no longer be a separate thing.

So where did the money come from to pay the mortgage in the interim? Is your money totally seperate such as any payments on the mortgage came from only a seperate account that only you had deposited money into?

 

[LdiJ]

Maybe this example will help you:

I own a house worth 200k and I have a mortgage on it. I currently have 100k in equity. I get married. I use my ongoing wages (community property) to make the mortgage payments. I pay off the mortgage. There is now 200k in equity. I sell the house. 100k of sales proceeds are my separate property. 100k of sales proceeds are community property (because I used community property to gain that part of the equity). That 100k is divided in half. So, what I end up getting is 150k from the house and my spouse gets 50K.

Another example:

Same scenario but I only use 40k of wages towards the house payments and I use a 60k gift from my parents for the rest. In that scenario it can be argued that only 40k of the equity is marital property as long as it was clear that the 60k was not given to me and my wife jointly.

Another example:

I own a house that is clearly my separate property. It is worth 200k with no mortgage. When I get married I sell it and use 20k of the money as a down payment on a new home. I put the rest of the money in a separate bank account that only has my name on it. That money is my separate property.

15 years later I get divorced. Unfortunately, across that 15 year span the house has appreciated in some years and depreciated in others. Therefore its very difficult to determine how much of the gain is marital and how much of the gain is separate property. Therefore, its likely that the house would just be treated as community property.

 

[latigo]

Well so much for "Free Legal Advice", which is what his is supposed to be about.
You don't have to be antagonistic about my discussion.

What I'm telling you isn't misguided. I'm telling you from professional experience now that it is rare to practically non-existent that any real estate sales that I've heard of or witnessed have had a lawyer as part of the process. Most are direct with the Title company.

Also, the point is, most people are like I was 10 years ago. At that time I was not a realtor. I was a person of little experience following the direction of my local realtor who says to just go to the title company and close. Done. I brought up the question, "Should my wife be on the title?" That should have been a signal, "Why would he ask that if there wasn't a reason?" Instead of expanding on that, the reaction was simply "Yes, she should." Rather thoughtless from professionals who probably have seen a variety of circumstances. At age 52, this was the first home I was buying independently in TX with a new wife in tow.

But does that mean the real estate industry can skate the law of separate and common law monies/property by avoiding lawyers? I can't change the past. What is done is done. So, is there any recourse after the fact if misdirected, to repair a poorly arranged deed/title etc after the fact? Or is it "too bad"; you lose.

I don't know what your comment means "what proof do I have that it wasn't a gift"? That's ridiculous. But I understand your point. A judge could argue, maybe I'm lying and I originally intended it to be a gift and now you are saying it never was. Well, I can tell you my wife would stand up for me and would say, "No, it wasn't ever a gift."

So what protection does a man have if he is lead to believe that it's a necessity to have your wife on a Title because "that's how it's usually done" who then finds out later that, "Er, oops, that was not very accurate guidance but, oops, now it's too late because you signed the bottom line".

Believe me, I was faked out on a different kind of contract where I signed with a car sale and realized after the fact that it was messed up. I had to threaten to sue to cancel the contract and get my trade in back. And I did.

Sounds to me that I need to talk with a local lawyer instead of trying to get good advice here.

"Good advice"? Advise as to what?

Instead of wallowing in self pity over imagined mistreatment why don't you try posing a direct legal question?

Is it necessary to call attention to the fact that so far you have not done so? Or that nowhere in your postings is there an inkling of a suggestion that someone is threatening to deprive you of your precious property rights?!