In Texas divorce cases, property is presumed to be community property if either spouse possesses it during the marriage or at the time of the divorce. Tex. Fam. Code Ann. § 3.003. To rebut the presumption, a spouse must trace the property and clearly identify it as separate by clear and convincing evidence. How a property is characterized is generally determined based on the character it has at inception, or when the party’s title has vested.
In a recent case, a husband challenged the trial court’s characterization of property received as a gift from the wife’s parents. When he petitioned for divorce, the husband requested a disproportionate share of the marital estate, due in part to “fault in the breakup…” He also asked for reimbursement to his separate estate for funds he had expended for the community estate’s benefit.
He testified that the property where the couple lived had been gifted to them by the wife’s parents. The “Gift Certification” signed by the wife’s parents stated they “intend to give to [husband and wife] a gift . . .” of the lot. It also listed the relationship as “son in law to be and daughter.” Both the husband and wife signed in acknowledgement of receiving the gift.
The court also admitted a warranty deed with the vendor’s lien listing the wife’s parents as grantors and only the wife as the sole grantee. There was also a copy of the vendor’s lien, showing a principal amount of $100 listing the wife as the maker and her parents as the payees. There was also a Release of Lien showing the payment and releasing the property. The county appraisal also showed the wife as the sole owner of the lot.
Before the couple married, they took out a loan to pay off the lot and an additional $90,000 to buy a manufactured home, using the lot as collateral. Both spouses were listed on the mortgage. The husband testified they still owed around $60,000.
The husband considered the lot community property because both spouses were named as recipients on the Gift Certification. He also thought he was entitled to 50% of the equity in the appraised value of the lot, or $30,000.
The wife’s mother testified she and her husband bought three adjacent lots, one for themselves and one for each of their children. She said they transferred the lot to their daughter only and had not intended to give it to both their daughter and her husband. She said they signed the Gift Certification because that is what the company asked them to do so the couple could get the loan.
The trial court found the lot was the wife’s separate property, but the manufactured home was the separate property of both the husband and wife. The court awarded the husband 50% of the home’s value. The court also found the husband was entitled to reimbursement because part of the home loan had been used to pay off the lot and ordered him to be given a lien on the lot. The court awarded 100% of the lot’s value to the wife and 50% of the home’s value to each spouse. The final decree awarded 100% of the interest in the lot to the wife and divested the husband of all rights and interest in the property.
The husband appealed, arguing the court should have characterized the lot as community property. He based his argument on the Gift Certification. The appeals court noted, however, that title vests when the deed is executed and delivered. Once the deed is recorded, there is a presumption the grantor intended to transfer the land in accordance with the deed. The appeals court found the Gift Certification was not evidence of the transfer. It may show the parents’ intent prior to the transfer, but it is not sufficient to contradict the deed. If the husband had shown the deed had been delivered or recorded for another purpose, that there was fraud, accident, or mistake, or that the parents did not intend to divest themselves of title, he could have rebutted the presumption that delivery was accompanied by the intent to convey. With no evidence of any of those exceptions and with the testimony of the wife’s mother that she only intended to convey the property to her daughter, the appeals court found the title vested in the wife prior to the marriage.
The husband also argued the lot’s being collateral for the home showed an intent to use it to benefit the community. The appeals court noted, however, that property is characterized based on its character at inception and later use for community purposes did not change that.
The appeals court found no error in the trial court characterizing the lot as the wife’s separate property.
The husband also argued the trial court erred by awarding him an inequitable amount of reimbursement. He did not, however, challenge the calculation used or identify a reimbursement claim the court had not addressed. The appeals court characterized his argument as a general challenge of the property division and rejected it.
The appeals court affirmed the final divorce decree.
In this case, the deed was the most important evidence in showing ownership of the property. The experienced Texas divorce attorneys at McClure Law Group have a thorough understanding of Texas property division. If you are facing divorce where the property division is likely to be a difficult issue, we can fight for a favorable property division for you. Call McClure Law Group at 214.692.8200 to set up an appointment to discuss your case.