More and more people are moving to Texas, with Dallas and Houston being the 2nd and 3rd fastest growing cities in the United States. This also means that more and more often, people who are going through a divorce in Texas have to split up property located outside of Texas. This article discusses how the Texas courts treat such out-of-state property during divorce.
Texas is a community property state, which means a married person's property is either separate property or community property. Basically, separate property is any property owned or claimed before marriage. Separate property also includes property inherited or received as a gift during marriage. Finally, separate property also includes any recovery for personal injuries sustained during marriage, excluding recovery for loss of earning capacity. Community property is any property acquired during marriage that is not separate property. All property is presumed to be community property unless proven otherwise. Regardless of which spouse purchased a community property asset, the community property asset belongs to both spouses. During a divorce, courts can divide a couple's community property in any manner the court deems just and right. However, courts generally cannot divide a married person's separate property during divorce. Therefore, the distinction between separate property and community is hugely important in a Texas divorce.
Not all states in the U.S. use the community property system. Only Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states. Alaska is an opt-in community property state. The other states use the common law system. Under the common law system, the spouse who purchased the property is the spouse who owns the property unless the spouses agree to own the property jointly. Furthermore, many other countries don't use the community property system.
For married couples that purchase property located outside of Texas while living in Texas, Texas divorce courts will generally treat that out-of-state property as community property; even if that property is in another country.
For the married couples that purchased property outside of Texas while living outside of Texas, Texas divorce courts will treat that out-of-state property as quasi-community property if the out-of-state property would have been community property had the couple been living in Texas when they purchased the property. Let me give an example to clarify. Bobby and Bunny live in Mumbai, India and get married in 2006. In 2010, Bobby uses his earnings since marriage to purchase a home in Mumbai, India worth $350,000.00. Bobby gets a great job offer in Austin, Texas, and Bobby and Bunny move to Austin in 2011. In 2014, Bobby files for divorce in Texas. How does the Texas court treat the house in Mumbai? To answer that question, the court will pretend that Bobby and Bunny lived in Texas when they purchased the house in Mumbai. If Bobby and Bunny lived in Texas when Bobby purchased the Mumbai house, then the Mumbai house is community property because it was purchased while Bobby and Bunny were married and using community funds. So for the purpose of Bobby and Bunny's divorce, the Mumbai house is quasi-community property subject to division between Bobby and Bunny in a manner the court deems just and right.
The only question that remains is how does a Texas court, on a practical level, divide property located in another state or country? A Texas court's jurisdiction to determine the title of property ends at Texas' borders. However, Texas courts have worked around this limitation by making rulings over the parties and not the property. Let's look to Bobby and Bunny again for an example.
After Bobby and Bunny's divorce case, the court decides that Bunny should get the house in Mumbai, India. The problem is that a judgment from a Texas court can't be enforced in India without additional court proceedings in India, and there is no guarantee that those court proceedings in India will be successful. Any enforcement of the Texas court's order will have to be done in Texas. Because of these limitations, the Texas court will not simply say in the divorce decree that Bunny owns the Mumbai house. Instead, the Texas court will word the divorce decree so as to order Bobby to transfer ownership of the Mumbai house to Bunny by a specific date. The divorce decree now requires Bobby to act in a certain way. If Bobby fails to act as ordered, then Bunny can file a lawsuit in Texas to enforce the divorce decree, and Bobby could face fines and jail time for not transferring ownership of the Mumbai house to Bunny. It's a subtle difference in wording, but enough to get the job done.
If you or your spouse own property outside of Texas and you need assistance with a divorce, contact Sugar Land divorce attorney Chikeersha Puvvada at 832-317-6705 or online today to schedule a free 30 minute consultation.