Understanding the Texas Community Property System

If you are considering purchasing a home in Austin, it is important for you to understand the community property system and how it affects you.  By understanding this system, you can make better decisions that will ensure financial security for both you and your spouse.

The Basics of the Texas Community Property System

In the simplest terms, the community property system in Texas stipulates that all of the property that a married couple acquires during the marriage is equally owned by both the man and the woman.  According to the system, this applies whether the marriage is by civil law or by common law.  This is because the law is derived from Spanish Civil Law, which looked at married couples as being “as one.”

Although all property is seen as being owned equally by both the man and the woman, there can be certain exceptions.  In the most general sense, property that is defined as being separate is not governed by the Texas community property system.

Defining Separate Property

In order to be exempt from the community property system utilized in Texas, the property must be considered “separate.”  According to the system, property can be considered separate if it meets any of the following conditions: 

• The property was claimed by the spouse or owned before getting married
• One person in the marriage received the property as a gift or by descent or by devise
• Property that was received in exchange for personal injuries the person sustained, so long as the property was not meant to replace loss of earnings 

If the property does not fall under one of these categories, it is considered to be community property and is owned equally by both the man and the woman.  Whether or not only one person worked and made payments on the property is irrelevant.  Even if the couple no longer lives in Texas, the same laws apply for any land that is still owned in Texas.  If the couple owns land in another state, on the other hand, that state’s laws would govern ownership rights.

Making Agreements

It is possible for married couples to make agreements regarding their property that are different from the Texas community property system.  For instance, the Texas Family Code allows couples to postnuptial agreements in which the couple agrees whether or not the property is community or non-community.  In order to create a legally binding agreement, however, legal assistance is necessary and the couple must be able to prove that the agreement will not be detrimental to the creditors of either the husband or the wife.

If you are considering buying or selling a home in the Austin area we would love to assist you.  Cantera Real Estate has a team of Austin Realtors ready to answer your questions!  1-800-790-7910

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