Divorce and Real Estate in Texas: Frequently Asked Questions

These are the questions I hear most often from Houston homeowners navigating a divorce. Some have short answers. Some need more. All of them come from real conversations with real people in the middle of one of the most disorienting periods of their lives. I am a Divorce Specialist and licensed REALTOR®, not an attorney. Nothing here is legal advice. But these are the real estate questions I can answer from direct experience.

Do we both have to agree to sell the house?

In most cases, yes — a voluntary sale requires both parties to sign the listing agreement and closing documents. If one spouse refuses to cooperate, the other can petition the court to compel the sale. A court can order the sale of the home and, in some cases, appoint a receiver or master to handle the transaction if the parties cannot cooperate. It is a slower, more expensive path that tends to result in a lower sale price. It is almost always worth exhausting negotiation before going that route.

What if one spouse is living in the house and won’t leave?

Occupancy during the divorce proceedings is a legal matter. Courts can and do issue temporary orders establishing who has the right to live in the home during the pendency of the divorce. That question is for your attorney. What I can tell you is that a home where one person is living and one is not changes the dynamics of maintenance, showing preparation, and the practical logistics of the sale. Both parties have to agree on those logistics regardless of who is physically present.

Does it matter whose name is on the deed?

Less than most people think, in Texas. Community property rules mean that a home purchased during the marriage is jointly owned regardless of which spouse’s name appears on the title. The exception is separate property — property brought into the marriage, inherited, or received as a gift — which may remain the sole property of the spouse who owns it. Your attorney can advise on the specific classification of your property.

Can we sell the house before the divorce is final?

Yes. In fact, many couples choose to sell during the proceedings rather than wait for the final decree, particularly when carrying costs (mortgage, taxes, insurance) are straining both parties’ finances. Both spouses must agree and cooperate on the sale. Proceeds are typically held in escrow or a trust account pending final distribution as outlined in the settlement agreement.

How is the home valued for a divorce settlement?

The most common approach is a formal appraisal by a licensed appraiser. Both parties may agree to a single appraisal or may each obtain their own. A Comparative Market Analysis (CMA) from a REALTOR® can also be used as a reference point, though it carries less legal weight than a certified appraisal in contested proceedings. If the parties cannot agree on value, a court may appoint an independent appraiser.

What if we still owe more than the house is worth?

An underwater mortgage adds a layer of complexity to an already complex situation. The options narrow: you can continue making payments and hope the market recovers, you can attempt a short sale (which requires lender approval and has credit implications for both parties), or in some cases you may face foreclosure. If your home is underwater, this is a conversation that needs to involve your attorney, your lender, and ideally a financial advisor in addition to a REALTOR®.

How do we split the proceeds?

The divorce settlement agreement or court order will specify the division. In a community property state like Texas, the default is an equal split, but courts have discretion to divide property in a manner that is "just and right" given the circumstances — which does not always mean 50/50. The proceeds at closing go to pay off the mortgage and selling costs first; whatever remains is divided according to the agreement.

Can one spouse receive the house and the other receive equivalent assets?

Yes, and this is often how buyouts work in practice. Rather than a cash payment, the spouse keeping the home may give up their share of a retirement account, investment portfolio, or other asset of comparable value. The accounting for this should be precise, with agreed-upon valuations for all assets involved. Retirement accounts in particular have tax implications that affect their true after-tax value — a $100,000 401(k) is not the same as $100,000 in home equity after tax consequences are applied.

What is a deed of trust to secure assumption?

In some divorce situations, one spouse keeps the home without immediately refinancing — perhaps because interest rates are not favorable or because they need time to qualify. A deed of trust to secure assumption is a legal instrument that gives the departing spouse a lien on the property as security against the remaining mortgage obligation. If the staying spouse fails to make payments or refinance by an agreed date, the departing spouse has legal recourse. Your attorney should advise whether this structure is appropriate for your situation.

Do I owe capital gains tax when I sell the house during a divorce?

Possibly, but the married-filing-jointly exclusion may still apply: couples can generally exclude up to $500,000 in capital gains on the sale of a primary residence if they’ve lived in it for 2 of the last 5 years. The timing of the sale relative to the divorce filing matters here, and it’s not a question a real estate agent can answer for you — your tax professional needs to evaluate it against your specific timeline.

What if the mortgage is in both names but only one spouse is keeping the house?

The spouse keeping the home must almost always refinance the mortgage into their name alone. Transferring the deed without refinancing the mortgage leaves the departing spouse legally responsible for a debt on a property they no longer own, which creates ongoing credit and legal exposure for them. Most courts will not finalize a divorce with a joint mortgage still sitting on a home that’s been awarded to one party.

Do I need a REALTOR® who specializes in divorce?

You need a REALTOR® who understands that a divorce sale is different from a standard transaction. That means someone who can maintain neutrality between two parties with potentially conflicting interests, communicate clearly with both spouses and their respective attorneys, manage the logistics of a home that may have occupancy complications, and handle the emotional dimension of the transaction professionally. A Divorce Specialist designation indicates formal training in these dynamics. More importantly, ask the agent directly how many divorce sales they have handled and what their approach is.