How Does Texas Deal with Out-of-State Property?
Updated: Nov 19, 2022
There are many different methods among the various states to characterize and divide property upon divorce. Texas is among a handful of states that is considered a "community property" state. The others are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, and Wisconsin. In community property states, property acquired during marriage is normally split equally between the parties upon divorce...or at least equitably. Texas has its own unique twist on this concept as it requires the court to divide the marital property in a "just and right" way, which means the court could take into consideration a number of factors to determine how to divide the property. Generally, however, this leads to more or less an equal division of the community property. Courts do NOT have the power to divide a person's separate property.
The other states (those not listed above), however, are more or less considered "common law property states." In common law property states, property acquired during the marriage by any party is considered the separate property of the person acquiring it. This can lead to some very harsh results in the case of stay-at-home spouses, so to rectify this problem many states have adopted the concept of an "elective share" or "forced share." This legal concept generally causes property to be allocated more evenly upon divorce or death.
This article is not meant to be a definitive authority on these topics, as the rules can get very complex from state to state, so the above is simply an overview of the general approaches among the states.
Given these different approaches, what happens if the parties have lived in common-law states and acquired property in those states prior to being domiciled in Texas? How is the property treated then by Texas if the parties divorce in Texas?
In short, Texas treats such property as "Quasi-community property." This is technically defined as "property that was acquired by either spouse while domiciled elsewhere that would have been community property had that spouse been domiciled in Texas at the time of the acquisition, or property exchanged for such property."
The legal statute for this concept is found in Tex. Fam. Code § 7.002(a). In relevant part, it states the following:
"In a decree of divorce or annulment the court shall order a division of the following real and personal property, wherever situated, in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage: (1) property that was acquired by either spouse while domiciled in another state and that would have been community property if the spouse who acquired the property had been domiciled in this state at the time of the acquisition; or (2) property that was acquired by either spouse in exchange for real or personal property and that would have been community property if the spouse who acquired the property so exchanged had been domiciled in this state at the time of its acquisition."
Note: Texas courts cannot render judgments affecting title to real estate outside of Texas, but a trial court can order a party to execute a deed with respect to out-of-state realty.
Further Note, however: To order the execution of a deed, the court must have personal
jurisdiction over the spouse so ordered. How to establish personal jurisdiction over a party can itself get complicated (and out of scope for this article), but once personal jurisdiction is acquired the court has criminal contempt power over the party. In other words, the court can throw a disobedient party into jail.
One last note: the “quasi-community property” principle has even been applied to property acquired by the spouses while living in another country.