Mischaracterization of Property in Texas Divorce

property-division-300x110The court in a Texas divorce must make a just and right division of the parties’ estate.  This does not necessarily require the court to award  the parties equal shares of the property.  Property acquired during a marriage is generally community property, but property acquired before the marriage or by gift, devise, or descent is separate property. A party claiming separate property must show that it is separate by clear and convincing evidence.  A husband recently challenged a court’s characterization of certain property as the wife’s separate property.

The parties got married in 1997 and the husband filed for divorce in 2019.  Each party sought a disproportionate share of the marital estate.

Wife Asserts Separate-Property Claim

According to the appeals court’s opinion, a significant issue in the divorce was property purchased by the wife in 1997 after the marriage.  She leased the building in 1990 and renewed the lease in 1995. After the marriage, she bought it.  She testified the written lease she signed in 1995 gave her an option to purchase, but she had lost the document.

The wife sold the property by special warranty dead in 2017.  The deed stated that the property was the wife’s separate property and not part of the parties’ homestead.  The husband signed the deed.

A valuation expert testified the property was the wife’s separate property.  The expert reviewed several documents, including documents reflecting that the business property was in the wife’s name. She also relied on the Special Warranty Deed, which included a recitation that the property was the wife’s separate property and the husband’s signature.  The expert traced the proceeds to an account in the wife’s name.

The trial court determined the property and the proceeds from its sale were separate property of the wife and awarded her certain funds remaining from the proceeds.  The court divided the marital assets and entered an equalizing judgment against the wife because the community assets were insufficient to provide for a just and right division.

Husband Appeals Separate-Property Finding

The husband appealed, arguing the trial court abused its discretion in characterizing the property as the wife’s separate property.

A party appealing a property division based on mischaracterization must show both that there was a mischaracterization and that there was harm.  Harm, in this situation, means that an order or property division that is unjust and unfair.

The appeals court found the record did not support a finding the trial court’s characterization of the property as separate resulted in a property division that was not just and right.  The trial court did not file findings of fact and conclusions of law showing the values it assigned to the assets and liabilities, the value of community property, or the factors it used to divide the estate.  That information is needed for the appeals court to be able to determine if mischaracterization resulted in harm.

Appeals Court Finds No Harm

The husband argued he was not required to request findings of fact and conclusions of law.  He also argued the trial court had made fact findings regarding the property in its judgment.  The appeals court held in a previous case, however, that it cannot determine if there is harm from a mischaracterization of property without findings of fact showing the value the court assigned to each community asset and liability, the value of the community property, and the factors the court used in making the property division. It did not matter to the appeals court’s determination of harm whether the husband was required to request findings of fact and conclusions of law for the appeal.  Additionally, although the court did find in its rendition and decree that the property was the wife’s separate property, this finding did not give the appeals court the information it needed to determine if the division was unjust.

The appeals court concluded the husband failed to show the alleged mischaracterization of the property resulted in harm.

The appeals court affirmed the divorce decree but reversed the court’s temporary orders awarding the wife attorney fees related to temporary orders.

Property Characterization Can be of the Utmost Importance – Call McClure Law Group Today

Mischaracterization of a significant asset can have a severe effect on property division.  In this case, the husband was unable to show that harm.  If your spouse is claiming valuable assets are separate property, a skilled Texas divorce attorney can help you determine your rights and present a strong case for a just and right property division.  Contact McClure Law Group at 214.692.8200 for a consultation.


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