Who Owns This House/Who Can Sell It/How Will The Proceeds Be Divided

[Adverse]

First, yes, those involved will seek the assistance of an attorney.

But, because I have been around here so long, I am a generally nice guy, and this is such an interesting situation, can we talk about it?

Yes, it's in Texas, a community property state.

Here goes . . .

In 2004, my cousin and her husband assisted their daughter and son-in-law in purchasing a house. They were told at closing that their daughter would not be on the Deed of Trust, but that she would be on the Deed, which they were not shown.

Today I accessed the documents online and provided copies to her. It's the first time she has seen the Deed.

Contrary to what my cousin was told at closing, their daughter is not on the Deed. They (my cousin and her husband) and their son-in-law are on the deed. There is no wording in the Deed regarding percentage of ownership among the three of them, so it is the appearance that they are equal.

Their daughter is described on the Deed of Trust as a "Non-Purchasing Spouse", but there is no designation at her signature. My cousin, her husband and the son-in-law are on the Deed of Trust, and they are each described as Borrowers at their signatures

Since 2004, the son-in-law has not had a job and has not made many house payments, car payments, etc.. The daughter has had a job and has been the one making regular payments, with my cousin and her husband contributing, making maybe 40% of the house payments.

So, can we talk about, who owns the house, who can sell the house, who gets the proceeds from the sale of the house, and any other pertinent stuff, like can a house that was purchased as "Separate Property" become "Community Property" by being paid for from Community Property funds?

Thanks, I'll be watching

 

[mightymoose]

The house belongs to the bank and any other lien holder.

As for who can sell it, it seems it may be a situation where there needs to be a meeting of the minds, otherwise there is likely court action ahead.

If behind on payments a foreclosure on the house my solve the problem too.

 

[army judge]

Your example is very unique.
Why?
The house was purchased by the parties, doesn't matter who fronted the money then and over the years.

What matters are three things:
Is the house placed in trust
Whose names are on the deed
Who will benefit by the trust

As you've posited things, the TRUST, not the people own the home.
Yet, the trust can't own in the entirety that which is still confounded by a lien, can it?
This creates a very interesting legal dilemma.
As you also advise, Texas is a community property state.

My wife and I own several properties.
Heck, we own lots of junk.
We've acquired all of the junk during our marriage of, ahem, many years. LOL
Some things are deeded in both of our names.
Some things are deeded in one of our names.
All things ate owned by our marriage corporation.
No things are encumbered any longer by a lien.
We own our junk free and clear of any liens.

No one can say how the home in your example will be divided, assuming the trust was created properly, it's impenetrable, even by the court.

The big, pink elephant wanders among the payers.
The punk elephant is the bank.
The bank, as Moose declared, owns this home.
The bank holds the lien.
The other players appear to be buying the home.
A couple of the players know that to buy one must pay.

The deadbeat hasn't paid, yet he too, enjoys certain rights.
The deadbeat is also a player, and an owner.

All I can say is the matter will NOT make one of my district court colleagues happy one morning after it appears on her or his docket.
Actually, it's one of their young law clerks who'll bear the real pain in this drama.
The entire matter portends to be very intriguing law in the making.

 

[Adverse]

Thanks . . . next question.

In a community property state, if separate property is paid for with community property funds, can it become community property?

I know you know what I mean, but just to say it, in this case what appears to be separate property belonging to the husband (disregarding the in-laws on the Deed and Deed of Trust) has been paid for with community property funds, money earned after the marriage, plus money provided by the inlaws.

Can the wife, the non-purchasing spouse, become an owner in this manner?

I did find this scenario on a Texas legal site.

 

[army judge]

Thanks . . . next question.

In a community property state, if separate property is paid for with community property funds, can it become community property?

If funds from the marital estate are used to acquire equity in an item, that's not the only factor determinative of potential ownership.
One would have to inquire as to the motive of the marital partner, insofar as to what they were attempting to accomplish by disbursing the funds of the marital estate.

The most recent, as well as notorious example of a shenanigan similar to your query, would be the dispute between former Clippers owner Donald Sterling and his wife over money allegedly taken from their marital estate and dispensed to Sterling's "gal pal". Mr. Sterling is currently in litigation to get those millions back.

I know you know what I mean, but just to say it, in this case what appears to be separate property belonging to the husband (disregarding the in-laws on the Deed and Deed of Trust) has been paid for with community property funds, money earned after the marriage, plus money provided by the inlaws.

You've accurately restated the legal issue that ultimately will be decided before some Texas district court judge.

Can the wife, the non-purchasing spouse, become an owner in this manner?

I think the wife is already an owner for the reasons we've beaten to death.
That said, its not up to me.
Its up to litigation being initiated, and a jury to ultimately decide.
Be advised, there are many hidden things we don't know.
Plus, trusts are generally impenetrable, if constructed properly.
That said, so is the marriage contract and community property.
But, there are exceptions, and that is how legal precedents are created.
Caution, even if created, appellate process and appellate judges can strike a death blow to original court decisions.
Bottom line, whatever I think won't matter.
I'm content to wait for what the courts ultimately decide.