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We’re divorcing, can I get my down payment for our marital home back?

On Behalf of | Jul 31, 2022 | Family Law

Money and children are two of the most controversial and contested issues in any divorce. After all, the raising of the children, and the money and time you have poured into your relationship, can be priceless. But what happens when one spouse attempts to put an actual dollar value on the marriage and seeks compensation from the other spouse when divorcing? This article will focus on what can happen in Texas when a spouse attempts to get their payment on a home reimbursed.

What is reimbursement?

First, it is important to understand that in Texas, Family code section 3.402 is a good place to start your inquiry when asking about reimbursable marital expenses. In Texas, reimbursement is an equitable remedy that is available to spouses who expend certain assets on certain types of expenses, and seek to then recoup those expenditures. In relevant part, the Texas Family Code states the following situations that can give rise to reimbursement claims:

Sec. 3.402. CLAIM FOR REIMBURSEMENT; OFFSETS.

  1. For purposes of this subchapter, a claim for reimbursement includes:
    1. payment by one marital estate of the unsecured liabilities of another marital estate;
    2. inadequate compensation for the time, toil, talent, and effort of a spouse by a business entity under the control and direction of that spouse;
    3. the reduction of the principal amount of a debt secured by a lien on property owned before marriage, to the extent the debt existed at the time of marriage;
    4. the reduction of the principal amount of a debt secured by a lien on property received by a spouse by gift, devise, or descent during a marriage, to the extent the debt existed at the time the property was received;
    5. the reduction of the principal amount of that part of a debt, including a home equity loan:
      1. incurred during a marriage;
      2. secured by a lien on property; and
      3. incurred for the acquisition of, or for capital improvements to, property;
    6. the reduction of the principal amount of that part of a debt:
      1. incurred during a marriage;
      2. secured by a lien on property owned by a spouse;
      3. for which the creditor agreed to look for repayment solely to the separate marital estate of the spouse on whose property the lien attached; and
      4. incurred for the acquisition of, or for capital improvements to, property;
    7.  the refinancing of the principal amount described by Subdivisions (3)-(6), to the extent the refinancing reduces that principal amount in a manner described by the applicable subdivision;
    8. capital improvements to property other than by incurring debt; and
    9. the reduction by the community property estate of an unsecured debt incurred by the separate estate of one of the spouses.

What does a spouse have to prove to qualify for a claim for reimbursement?

The spouse claiming the reimbursement has the burden to prove that there is in fact, a reimbursable claim and must do so with clear and convincing evidence. How about an example of one instance where a reimbursable claim may apply?

Let’s say John has $100,000of separate property funds in a bank account before he married Sally. John and Sally get married and purchase a home during the marriage. The down payment for the home is $50,000. John is feeling generous and wants to give his family a head start, so he used $50,000 of his separate property funds he has in his bank account to pay the marital home down payment. Afterwards, for every month of their marriage, John and Sally pay the mortgage with funds from their marital paychecks. Unfortunately, five years later John and Sally divorce. John says, “I want my down payment back that I paid for the home”. Sally says, “I want half the money I put into the mortgage every month for the last five years”.

In this example, John has a claim for reimbursement based on Texas Family Code 3.402(a)(5). John used his separate property funds to pay down a community property debt. If he can show by clear and convincing evidence that he paid for the down payment with his separate property account funds, he has a valid claim for reimbursement.

What about Sally? Sally would not have a claim for reimbursement. Sally used marital funds to pay for a marital debt. This likely would not result in a successful claim for reimbursement.

I have a valid reimbursement claim, how will I receive my money back?

Spouses should keep in mind that reimbursement is an equitable remedy, and Courts will take into account equitable principles of the parties when making an award. In all cases, it is up the Judge in your case to determine if a reimbursement is appropriate. In the event a spouse has a successful claim for reimbursement, the Court can award a money judgement, or even an equitable lien on the property of the benefited spouse to satisfy the award. Based on the above example with John and Sally, John could place a lien on the marital home for the $50,000 he put into the down payment of the home.

How common are reimbursement claims in divorce?

Reimbursement claims against the other spouse or some type of property are extremely common in every divorce. The merits of the claims are a whole other issue that is typically ferreted out as the litigation process progresses and issues become clearer. As you can glean from this article, due to the complexity of mounting a successful reimbursement claim, it is not common to see successful reimbursement awards during divorce. Often times, we will advice our client on the aspects of reimbursement and the possible defenses to a reimbursement claim, with the caveat that there are several moving parts standing in between our advice, and a successful award or defense.

Questions about reimbursement claims? Contact the Criss Law Group

If you have any questions about today’s content, please do not hesitate to contact the Criss Law Group, PLLC. Our licensed family law attorneys are available to answer your questions. We offer free of charge consultations here in our office where you can get direct feedback about your circumstances from one of our attorneys.

Disclaimer: The legal information presented herein should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. General advice should always be tested by the particular facts and circumstances of each case. Legal advice is almost always case specific. Statues, ordinances, legal procedures, case law and rules of evidence are often revised.