Navigating Real Estate Escrow And Divorce: A Helpful Guide To Scenarios

by | Aug 30, 2023 | Attorney Resources, Client Resources

Navigating the intricacies of real estate during a divorce in Texas can be a complex and often overlooked aspect of the process. One crucial piece of this puzzle is the fate of your real estate escrow account after the sale of your marital home.

In this blog post, we’ll delve into what happens to these funds in various scenarios, shedding light on the crucial factors that can determine the outcome. Depending on when the sale of the home takes place, this account could hold a significant amount of funds!  So it’s important not to forget about this piece during negotiations and drafting the settlement agreement.

I’d like to share some insights on what goes down with a real estate escrow account after a divorce and home sale in Texas. 

In Texas, the fate of the real estate escrow balance will depend on various factors. Here are a few possible scenarios:

Remember, this is not intended to be legal advice. If you’re in this situation, it’s important to consult a divorce attorney for the nitty-gritty

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Divorce and Real Estate Escrow Scenarios

1) Community Property Split

If the escrow account contains funds that are considered community property, it might get sliced up equally between ex-partners, or per negotiated terms between the parties. (#3 below)

2) Separate Property Allocation

If the funds in the escrow account are determined to be separate property of one of the spouses, it could be off-limits for division.

3) Distribution Per Settlement Agreement

If the divorcing parties have a settlement agreement that addresses the division of assets, including the escrow account balance, the agreement will dictate how the funds are distributed.

*If funds are to go to one party and the check is written to both parties on the mortgage, be sure terms are written so that the non-receiving party is to cooperate with endorsement of the check.*

4) Court Determination

If things get sticky and there’s no agreement in sight, the court might be the one holding the reins . They’ll consider each party’s financial contributions, assets, and the overall fairness of the split. 

5) Attorneys and Legal Fees

If there are outstanding legal fees or other expenses related to the divorce proceedings, the escrow account balance might be used to cover these costs before any division takes place.

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How I can help you through your divorce and real estate escrow

I’m here to help you navigate the complexities of real estate in divorce situations.  Please request a call down below for additional information.  It’s important to stay informed because knowledge is power. 

(Remember, this article is not intended to be legal advice). If you’re considering divorce or separation, it’s important to also consult a divorce attorney.

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