What in the world is property liability?
What in the world is property liability?

What in the world is property liability?

What in the world is property liability?What in the world is property liability? – We’ve heard of personal liability, which is a financial obligation an individual is responsible for. But what is property liability, and how does it work?

As the name suggests, property liability is attached to property rather than an individual or couple. Property can be seized and sold to satisfy a debt, and it is not contingent on a spouse’s personal liability. In other words, the property can be used to pay a debt even if the spouse is not personally liable for the debt.

A good example from some of our more recent blogs: Even if one spouse was not personally liable for their spouse’s debt, their joint-management community property can be seized to pay the obligation.

So how is property liability determined? There are two steps.

  1. Determine if the property falls in an overall class of marital property, i.e. sole-management community property, joint-management community property, separate property.
  2. If that property is liable under the Texas Family Code, determine if it would be exempt under other law.

Liability under the Texas Family Code is determined by the type of debt involved (tortious or non-tortious), when the debt was incurred, and who is personally liable on the debt (one or both spouses).

Below is a breakdown of property liability under the Texas Family Code:

Property subject to seizure and sale to satisfy a tortious debt incurred before marriage.

  1. All marital property owned by the personally liable spouse.
  2. All joint-management community property owned by the innocent spouse.

Property exempt from seizure and sale to satisfy a tortious debt before marriage.

  1. All separate property owned by the innocent spouse.
  2. All sole-management community property owned by the innocent spouse.

Property subject to seizure and sale to satisfy a tortious debt incurred during marriage.

  1. All marital property owned by the personally liable spouse.
  2. All sole-management community property owned by the innocent spouse
  3. All joint-management community property owned by the innocent spouse.

Note: All separate property owned by the innocent spouse is exempt from satisfying a tortious debt incurred by the other spouse during marriage. Also note that property liability rules to satisfy non-tortious debts, whether incurred before or during marriage, are the same except for the following:

Property subject to seizure and sale to satisfy a non-tortious debt incurred during marriage.

  1. All marital property owned by the personally liable spouse.
  2. All joint-management community property owned by the innocent spouse.

Property exempt from seizure and sale to satisfy a non-tortious debt incurred during marriage.

  1. All separate property owned by the innocent spouse (unless the contract was for necessaries).
  2. All sole-management community property owned by the innocent spouse (unless for necessaries).

As mentioned earlier, even if marital property is liable per the Texas Family Code, it may still be exempt under other law. Some of the most common property exemptions under Texas Law include:

  1. Personal property listed under the Texas Property Code that has aggregate fair market value of up to $100,000 for a family or $50,000 for a single adult.
  2. Religious books, such as a Bible.
  3. One or more cemetery plots.
  4. Current wages for personal services.
  5. Alimony, child support, or spousal maintenance.
  6. Various types of insurance benefits.
  7. Texas workers’ compensation benefits.
  8. Unemployment benefits.
  9. Health savings accounts.
  10. College-savings plans.

If there is something we have discussed or not covered that you need further explanation on, please contact our Nelson Law Group, PC office to let us know. We are happy to help.

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Source: Nelson Law Group