Marital Home Built on Gifted Lots Retains Separate Property Characterization in Texas Divorce

iStock-483613578-300x204The characterization of property in a Texas divorce is generally determined by the property’s character when the spouse acquired it.  Separate property is property a spouse owned before the marriage or acquired during the marriage through gift, devise, or decent.  Improvements made to separate property are generally also separate property because they are not divisible from the land. Community property is property acquired by either spouse during the marriage that is not separate property.  In a recent case, a wife challenged a court’s characterization of the marital home as community property.

Home Built During Marriage

According to the opinion of the appeals court, the parties got married in 1995.  In 2000, the husband’s mother transferred two lots to both of the parties by a gift deed.  They built the marital home on those two lots during the marriage.  The wife moved out of the home when the parties separated in 2015.  The husband had stayed there and paid the household bills and property taxes.

The trial court ordered the home to be sold.  It awarded 75% of the net proceeds from the sale of the home to the husband and the other 25% of the net proceeds to the wife.

Wife Appeals

The wife appealed, arguing the trial court erred in characterizing the residence as community property. She argued the lots had been given to the husband and her as gifts and were therefore separate property.  The husband argued that the home had been built with community funds, so the property could be recharacterized as community property.

There was no dispute that the lots were separate property of both parties.  Because the marital home was built on separate property, it was also separate property.  The appeals court determined the trial court erred in characterizing the home and the land it sat upon as community property.  When a court mischaracterizes separate property and awards a portion of it to another party, it improperly divests the party holding the interest of their property.

The appeals court reversed the property division portion of the decree and remanded to the trial court for a new trial on the property division.

Inception-of-Title Doctrine

This case illustrates the inception of title doctrine.  The property was gifted to the spouses by the husband’s mother, but it was clearly conveyed to both parties and was therefore the separate property of both when they acquired it.  The family home was built on the those lots and took on the separate character of the underlying land.  The wife moved out, leaving the husband to live in the home and pay the bills and taxes, but the property retained its separate character.  Nothing that happened changed the separate characterization the property had when the parties acquired it.

If you or your spouse have property that was gifted or inherited, a knowledgeable Texas divorce attorney can advise you regarding separate and community property and the associated rights of the each party.  The attorneys at McClure Law Group have the skills and experience to help you fight for a favorable property division.  Schedule a consultation by calling our offices at 214.692.8200.

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