A property settlement agreement is a court document outlining how a couple’s property will be divided after ending their marriage. Once approved, either spouse can ask the court to enforce it.
Courts don’t have to divide property if spouses agree independently, but any agreement still requires approval, as only a court order is enforceable against third parties. Texas divorce courts prioritize fairness, considering ownership and adjusting the division if a 50/50 split isn’t equitable.
This blog explains how a court-approved property settlement agreement works, including how marital property is divided, when court approval is needed, and how Texas courts ensure fairness in property splits.
Property Ownership When You are Married in Texas
Couples own two types of property after they are married in Texas, community property and separate property. Community property is subject to division in divorce. Separate property is not. How property ownership is characterized at the time of a divorce largely determines how it will be divided.
Community property includes property gained by a spouse during the marriage, unless it is separate property. Community property also includes debts incurred during the marriage. It does not matter whether the asset or debt is not in both spouses’ names.
Separate property includes:
- Property owned before marriage
- Property acquired during marriage by gift or inheritance
- Personal injury compensation, except for any portion awarded for lost wages/earnings
If one spouse gives property to the other as a gift, the gift usually includes any income or new property that comes from it. This means it will stay separate property. This rule does not cover income from property owned before the marriage or gifts given by someone other than a spouse.
In most cases, if separate property increases in value on its own, it stays separate property. However, if the increase in value happens because of money or effort from the marriage, it may become community property. The law also allows spouses to agree in writing to keep the growth and income from separate property as separate property.
In Texas, married couples have community property—divisible in divorce—and separate property, which is not.
What Happens When Community Property and Separate Property Get Intermixed?
The law presumes that all property owned at the time of divorce is community property. Ownership of separate property must be demonstrated with ‘clear and convincing evidence’. If separate money and community money are put in the same bank account and there are no clear records, the money can get mixed together. Then, the whole account may count as community property.
When a property has both community and separate interests, the rule of inception of title decides who owns it. This means the property is treated based on who owned it when the title was first given.
For example, if a married couple moves into a home that one spouse owned before the marriage and they keep making mortgage payments, the home stays that spouse’s separate property. The community may have a financial interest if community money or work was used on the property during the marriage.
Property in Divorce is Divided according to What is Just and Right
Both spouses jointly own community property in equal shares. However, that does not mean each spouse will take exactly half of all community property. The general rule under Texas law is that a court will divide the community estate as it “deems just and right”.
In determining whether a property division is just and right, a court considers many factors, including:
- Length of marriage
- Disparity of income between spouses
- Separate property owned by each spouse
- Health and physical abilities
- Advantages or benefits lost to one spouse
- Future support needs
- Indebtedness
- Child custody and the needs of children
- Educational needs and future employability
- Fault for the breakup of the marriage
If a court finds that one spouse cheated or committed fraud against the community, it may give the innocent spouse a larger share of the marital property. The court can also order the guilty spouse to pay money, cancel any dishonest transfers, and give fines or punishments to the spouse who did wrong.
Three Types of Property Settlement Agreements for Divorce in Texas
Divorce property settlement agreements are typically reached in one of three ways. The best agreement depends mostly on how well the spouses can agree and how complicated dividing the property is.
Mediated Settlement Agreement (MSA)
A mediated settlement agreement is a legal contract for dividing property, created with the help of a neutral mediator. It must be in writing and signed by all parties and their attorneys. An MSA is generally irrevocable, and courts have limited power to modify its terms so long as procedural requirements are met.
Rule 11 Agreement
Rule 11 agreements are those made pursuant to Rule 11 of the Texas Rules of Civil Procedure. A Rule 11 agreement is a binding contract between divorcing spouses that sets how marital property will be divided. The agreement must be in writing and signed by all parties and their attorneys. Rule 11 agreements are revocable until filed with the court.
Unlike MSAs, the court reviews Rule 11 settlements to determine if the property division is just and right. Once approved, they become enforceable court orders.
Informal Settlement Agreement
Informal settlement agreements are authorized in Chapter 6 of the Texas Family Code. Divorcing parties may agree to informal settlement conferences with or without the presence of attorneys. An informal settlement agreement is binding on the parties if it clearly states that it is non-revocable and is signed by all parties. The terms will be binding on the court once it finds they are just and right.
Divorce property settlement agreements are typically reached in one of three ways, depending on how well spouses can agree and how complicated dividing the property is.
Enforcing a Texas Divorce Property Settlement Agreement
The terms of a court-approved property settlement agreement can be enforced by filing a lawsuit in the same court. Either party has 2 years to seek enforcement, starting from the later of the date the divorce decree was signed or the date the divorce became final after an appeal.
The court cannot change the original order. It can only give guidance to help carry out the property division or explain the order. The court can also make the party who does not follow the order pay damages to the other party. A non-complying party may even be held in contempt of court, which can lead to fines, jail, or both.
Next Steps
The top Pearland divorce lawyers at Terry & Roberts help protect the futures of clients going through divorce in Brazoria County. Contact us today to discuss your case and learn how we can help safeguard your rights.