No one dies in this column.
There will be no talk of grieving widows or unhappy orphans. Instead, this column will be devoted to a lighthearted topic: deeds and why their wording matters.
Texas, you see, is a community property state. When you are married, your real property is characterized as either community or separate. Property acquired during marriage is presumed to be community property. Property acquired before marriage, by gift or by inheritance, is presumed to be separate property.
In a divorce, the court can divide the community property, but a spouse usually gets to keep his or her separate property. Thus, the spouse has a huge incentive to prove property is separate property.
Let’s see how that plays out with a notoriously tricky document: the deed.
Brenda and Frank Raymond were married on June 20, 1987. Before marrying, Frank had purchased a lot in Lake Jackson, Texas. That made it Frank’s separate property.
After marriage, at Brenda’s urging, Frank executed a deed conveying an undivided one-half interest in the property to her.
Then they divorced. Frank claimed that he never intended for Brenda to have an interest in the Lake Jackson property. Not so, said the court. The deed he signed to Brenda was a gift. A gift is separate property. When they divorced, Frank owned an undivided half-interest in the Lake Jackson lot as his separate property, and Brenda owned an undivided half-interest as her separate property.
Let’s move on to Anthony and Victoria Ustanik. They were married on July 17, 2010. After marriage, Anthony acquired a property in Alvarado from his parents. The deed recited “Anthony Ustanik, a Married Person,” as the grantee.
Anthony and Victoria then filed for divorce. Anthony claimed the property was a gift to him from his parents, and therefore his separate property.
Not so, said the court. The property was acquired during marriage and was presumed to be community property. Anthony had to overcome that presumption. While he claimed the property was a gift, the language in the deed recited that the property was conveyed to Anthony for consideration of $10 “and other good and valuable consideration.” That is not the language for a gift. A gift is a voluntary transfer of property made gratuitously and without consideration.
That brings us to Michael and Texie Nash. They were married on Aug. 6, 1997. Between 2000 and 2011, Michael purchased several properties that were deeded just to him.
Then they divorced. Michael claimed those properties were his separate property.
One was the Grubb Pottery Warehouse property. Michael had signed the contract to purchase the property, the loan was solely in his name and the deed was in his name. The court found it was community property because it was purchased during marriage.
Another property was the Loop and 59 Tract. It was deeded only to Michael, and the loan was solely in his name. Both Lexi and Michael signed the deed of trust securing the loan. The court found it was Michael’s separate property.
Why the difference? Because the deed recited it was conveyed to Michael, “a married man, as his sole and separate property and not joined in … by his spouse …” That negated the community property presumption. When Lexi signed the deed of trust, she became a party to the transaction and therefore gifted her interest to him.
This same type of analysis plays out daily in probate court, where property characterization can wipe out an entire estate plan. Deeds are indeed important.
Attorney Virginia Hammerle is board certified in civil trial law by the Texas Board of Legal Specialization and an accredited estate planner. To receive her monthly newsletter, contact her at legaltalktexas@hammerle.com or visit hammerle.com. This column does not constitute legal advice.
