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TEXAS OWELTY LIENS

Updated: Nov 2, 2023



A real estate transaction is complicated enough, then when you add a divorce to it, it can be confusing and challenging. When considering selling or buying out your spouse's equity, one of the first questions you need to ask is, “What Is My Home Worth?

Then you may ask, “should I keep the house or should we sell it?” The answer to that question depends on several factors;

  • Can I afford to keep it?

  • Do I want to stay here with all the memories or start new ones with a fresh start?

​​If you have decided to keep the home, then you may be asking, “how can I buy out my soon to be ex-spouse equity in the home?”

One of the most powerful tools to use in order to accomplish this is called an Owelty Lien.


What is an Owelty Lien?

An Owelty Lien is a loan to divide equity between parties that want to buy-out their shares. It is most commonly used for divorcing couples or heirs in a probate situation.


The party giving up their interest in the home obtains the Owelty Lien against the property. The Owelty Lien must be filed at the courthouse in the county in which the property is located. ​


When the party keeping the home finally sells or refinances, the other party is paid their part of the equity. This solution allows one person to obtain the full interest in the home while removing the other spouse from the mortgage, while also providing them with some of the equity in usable cash.​


An Owelty Lien in Texas, is the only way divorcing couples can access more than 80% of the home's current value without violating the Texas A-6 law, or cash-out law. ​


Borrowers will pay higher interest rates and term rates if they use another type of ‘cash-out- loan, which makes the Owelty Lien a better solution.


Why Not Use the Cash-Out Refinance?

A Cash-Out Refinance limits parties to only pull out up to 80% of the value of the property under Texas Equity laws. An Owelty Lien allows 95% of the value and also allows the spouse to refinance later with lower rates and better terms.




Here Are A Couple Of Examples:

Sara and Sam are going through a divorce. Their home is valued at $450,000, and the couple currently owes $250,000. Let’s assume they are splitting the equity 50/50 (or $100,000 each). Their divorce decree must specify the owelty and the owelty lien must be recorded with the courthouse. Sam would then be able to refinance the property at $400,000: the $250,000 owed on the mortgage in addition to Sara’s $150,000 owelty lien. Sara receives her $150,000 and now Sam is the sole owner of the home, with Sara removed from the mortgage and the deed.


Steve and Paula are going through a divorce. Their home is valued at $450,000, and the couple currently owes $250,000. Let’s

assume they are splitting the equity 50/50 (or $100,000 each). Paula would then be able to refinance the property at $400,000: the $250,000 owed on the mortgage in addition to Steve’s $150,000 Owelty Lien. Steve receives his $150,000 and now Paula is the sole owner of the home, with Steve removed from the mortgage and the deed.


In the above example, if Steve and Paula use a Cash-Out Refinance the largest loan they could get would only be $360,000 (current value X 80% = loan amount) $450,000 X 80% = $360,000. Using the Owelty Lien the couple is able to get more equity out of the house and use the money to pay off the spouse leaving the property. ​


WARNING! Both parties need to plan and pre-qualify for a refinance if they wish to retain the property. Many times one spouse can not qualify for the mortgage on their own. Without proper planning BEFORE the divorce is filed the result could be devastating for both. Both spouses' credit could be ruined because the retaining spouse can not refinance and the equity can not be divided without a sale.

Contact Us​

To talk about your situation and your options if you feel an Owelty Lien would be beneficial and find out the true value of your home. Even before the divorce proceedings begin, we can evaluate your financial situation, help you retain a large percentage of your estate, and uncover any unknown that could stop you from refinancing your property. Call 469-556-1185 or fill out our online request form.



If you are thinking of, or in the middle of a divorce, we want you to know you're not alone and we’re here to help. If you would like to discuss how we can assist you with your future plans, please give me a call at 469-556-1185.   Geni Manning

If you are thinking of, or in the middle of a divorce, we want you to know you're not alone and we’re here to help. If you would like to discuss how we can assist you with your future plans, please give me a call at 469-556-1185.

Geni Manning


Disclaimer: The information provided in this website and our blogs is not intended for legal, financial or mental health advice but is for general informational purposes only. While we endeavor to provide the latest information on a particular subject, future changes to the source Information is beyond our control.

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