Who Covers the House Selling Costs in a Divorce?

Who Covers the House Selling Costs in a Divorce?

Divorce is a challenging process; emotions and tensions often run high, and numerous logistical details arise and need to be appropriately managed. One of the most significant issues couples face is what to do with their family home. Whether it’s filled with cherished memories or is simply a substantial financial asset, deciding who is going to pay for the costs associated with selling the home can be frustrating, stressful, and tricky, especially if you do not know the process in the state of Texas or have received misinformation. Also, keep in mind that some aspects of selling significant assets in a divorce will be particular to the details and intricacies of your specific situation and circumstances. If you find yourself struggling with the complexities of selling your family home during a divorce and navigating the legal process in Texas, it may be wise to seek guidance from an experienced divorce law firm in Texas. They can provide invaluable assistance and protect your legal rights throughout the divorce process, including issues related to the sale of marital assets, such as your family home.

Know the Costs Associated with House Selling

Before tackling who is paying for what, it’s essential to break down those typical costs that get tagged onto selling a home. Understanding these expenses and fees will help both you and your soon-to-be ex-partner prepare for the economic impact:

• Real Estate Agency Commissions: Your agent’s commission can be a significant cost in the selling process. Typically, this cost runs between 5% and 6% of the sale price. However, a good agent can alleviate a lot of the stress and burden of putting your house on the market, and realizing all they do can help you appreciate the fee associated with their services.
• Closing Costs: Fees for title insurance, escrow, and more often amount to 2-5% of the sale price.
• Repairs and Renos: Renovations, curb appeal-boosting projects, and necessary fixes can add up, depending on what’s needed to make your home market-ready.
• Staging: Whether you empty your house of your belongings before open houses begin or not, you may need to invest in some items to stage a few rooms to help buyers envision themselves in the home and encourage them to put in offers on your home.
• Moving Costs: Expenses related to physically moving out all of your things, from appliances you are taking to furniture, heirlooms, and more, fall under this category of “moving costs.”

These costs can add up quickly, making it critical for divorcing couples to understand who will be responsible for covering them.

Texas Community Property Laws

Let’s take a look at how Texas views property during marriage and its division in divorce. In Texas, the division of property during any divorce follows the community property principle– in essence, the law notes any property acquired during the union or on the dissolution of the marriage by either spouse is assumed community property, with some exceptions for separate property, like the inheritance of money, real estate, and other assets. To prove separate property, you need to demonstrate and provide clear and convincing evidence.

However, if you titled inheritance in your spouse’s name, commingled it with a joint banking or another joint account, or gave them rights or ownership to it in a written agreement, then they would be able to lay claim to the inherited item, property, or funds in a divorce. In such circumstances, discussing your options with a divorce attorney would be best, especially as there are many distinctions that affect how the house sale proceeds and the costs involved are divided. Although community property is usually divided equally between spouses, it’s not always necessarily a 50/50 split for each asset.

Determining Responsibility for Costs

Determining who covers the house selling costs in Texas divorce can vary based on several factors:

• Mutual Agreement: An ideal scenario involves both parties agreeing on how to split the costs. The arrangement can be part of the divorce settlement and should clearly outline each party’s responsibilities.
• Financial Disparities: In cases where one spouse has significantly greater financial resources than their partner, they might agree or be ordered to cover a larger share of the costs. Consideration in these cases will aim to ensure fairness, especially if one spouse has been the primary breadwinner or if one spouse was primarily the homemaker or took on most of the day-to-day childcare duties and responsibilities.
• Mediation and Negotiations: Often, couples may not agree initially. Mediation can help negotiate fair resolutions in such cases. A mediator can facilitate discussion to reach an agreeable division of costs. However, both parties need to be willing to negotiate and make compromises.
• Court Decisions: If all else fails, the court will step in to make a determination. Judges in Texas will examine all attributes of the marriage, including the financial situation of both spouses, contributions to the home, and any prenuptial agreements. The judge’s goal is to produce a fair and equitable distribution of costs.

Practical Steps for Selling a Home During Divorce

Getting an Appraisal

Prior to selling, it is beneficial to get a professional appraisal done on your home to determine its true and current market value. An appraisal ensures both parties have realistic views and understandings of what the property is actually worth and helps tremendously in setting a fair selling price.

Choosing the Right Real Estate Agent

Selecting a real estate agent with experience in handling home sales for divorced or divorcing couples is critical. These professionals have navigated the complexities and emotional aspects involved in selling under such circumstances and can ensure an overall smoother and streamlined process.

Preparing Your House for The Market

Agreeing on any necessary repairs or staging costs is pivotal. Both parties should be involved and aware of the costs ahead of time. These expenses should be discussed and divided in a way that both find fair. Keeping detailed records of all expenses will help prevent disputes later. If an arrangement is reached where one party is willing to take on these costs, documenting any such agreement is important.

Listing and Selling

Once the home is ready, listing it at a competitive price is crucial. Both individuals must remain involved in the process and communicate regularly with the agent to ensure everything is handled efficiently and there is full transparency between the involved parties.

Dividing the Proceeds

After the sale is completed, the earnings do not automatically get divided 50/50. The proceeds from the sale of the home will be divided according to the divorce agreement or court order. If one spouse covered more of the selling costs, this should be factored into the final division to ensure fairness.

Navigating Court Orders and Legal Advice

Court orders often dictate how the home and associated costs are handled. It’s crucial to follow these orders to avoid legal complications. Additionally, seeking legal advice from a divorce attorney can provide you with clarity and help protect your interests. They can guide you through the process, ensuring all legal requirements are met and that you make only informed and practical decisions.

What About Capital Gains Tax?

Taxes should never be overlooked when selling a home. Selling a house can result in capital gains tax if the property value has increased significantly. In Texas, as a community property state, both spouses may be required to split the tax liability. Consulting with a tax professional can help minimize the impact and allow you enough time to plan accordingly.

Home Sale Case Studies: Real-Life Scenarios

Look at the following two examples of divorce and house sales in Texas and notice how the same undertaking can have different results.

Example A: Amical Agreements with Alex and Alice

Alex and Alice decide to sell their home as part of their divorce. Both parties agreed to split the sale costs equally. They sold the house quickly, divided their proceeds, and moved on to the next chapter of their lives without significant conflict.

Example B: Courtney and Ivan’s Court Intervention

Courtney and Ivan couldn’t agree on who should be held responsible for covering the selling costs. The court stepped in and, after reviewing all financial records and circumstances, ordered Ivan to cover 60% of the costs due to the difference in his income compared to Courtney’s earnings. The end result ensured Courtney, who had been a stay-at-home parent and was re-entering the workforce, was not unfairly burdened by the costs associated with the sale of this major asset.

Bringing on a Legal Advocate from a Divorce Law Firm

Selling a home during divorce involves careful consideration of the costs and the legalities applied. Understanding who covers these costs can help ease the process and ensure a fair outcome. Whether through mutual agreement, mediation, or court decisions, it’s essential to approach this aspect of divorce with respect and a level-headed approach. A trusted Houston divorce lawyer will identify the right strategy for your situation and offer years of knowledge, negotiation skills, and guidance. If there is even a hint that you may be selling the family home, it’s best to get a jump on understanding the process and legalities. Contact us for a confidential consultation with an experienced Texas divorce lawyer.

Kevin Hunter

Attorney Kevin Hunter at Boudreaux Hunter & Associates, LLC has experience with child custody, spousal support, high conflict divorce, and is fully equipped to guide you through the process. Learn more about Kevin on his profile here.