76R11160 JMM-F
By Goodman H.B. No. 2142
Substitute the following for H.B. No. 2142:
By Reyna of Bexar C.S.H.B. No. 2142
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the appreciation in value of separate property during a
1-3 marriage.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. POLICY STATEMENT. In accordance with the duty of
1-6 the legislature to pass laws clearly defining the rights of the
1-7 spouses in relation to separate and community property, the
1-8 legislature declares that, under certain circumstances, the
1-9 enhancement of the value of separate property during marriage that
1-10 is due in whole or in part to contributions made by the community
1-11 property estate creates an equitable interest of the community
1-12 estate in the enhanced separate property. The legislature adopts
1-13 the rationale stated by the Texas Supreme Court in Anderson v.
1-14 Gilliland, 684 S.W.2d 673 (Tex. 1985), that "the enhancement in
1-15 value to the benefited estate ... [is the] rule ... more likely to
1-16 insure equitable treatment of both the contributing and benefited
1-17 estates in most situations." The legislature also adopts the
1-18 principle that the contributing estate is entitled to an equitable
1-19 interest in the benefited separate estate. The legislature rejects
1-20 the rationale expressed in Jensen v. Jensen, 665 S.W.2d 107 (Tex.
1-21 1984), which applied the "reimbursement theory" rather than the
1-22 competing apportionment theory.
1-23 SECTION 2. AMENDMENT. Chapter 3, Family Code, is amended by
1-24 adding Subchapter E to read as follows:
2-1 SUBCHAPTER E. EQUITABLE INTEREST OF COMMUNITY ESTATE
2-2 IN ENHANCED VALUE OF SEPARATE PROPERTY
2-3 Sec. 3.401. ENHANCEMENT IN VALUE DUE TO COMMUNITY TIME,
2-4 TOIL, AND EFFORT. (a) The enhancement in value during a marriage
2-5 of separate property owned by a spouse due to the time, toil, and
2-6 effort of one or both of the spouses during the marriage creates an
2-7 equitable interest of the community estate in the separate
2-8 property.
2-9 (b) The existence of the equitable interest established
2-10 under Subsection (a) may be rebutted only to the extent that the
2-11 spouse who owns the separate property proves by clear and
2-12 convincing evidence that the enhancement in value is not due to the
2-13 time, toil, or effort of either spouse during the marriage.
2-14 Sec. 3.402. ENHANCEMENT IN VALUE DUE TO FINANCIAL
2-15 CONTRIBUTION OF COMMUNITY PROPERTY. (a) The enhancement in value
2-16 during a marriage of separate property owned by a spouse due to
2-17 financial contributions made with community property creates an
2-18 equitable interest of the community estate in the separate
2-19 property.
2-20 (b) The equitable interest created under this section is
2-21 measured by the amount of the enhancement in value of the separate
2-22 property.
2-23 Sec. 3.403. USE OF COMMUNITY PROPERTY TO DISCHARGE DEBT ON
2-24 SEPARATE PROPERTY. (a) The use of community property to discharge
2-25 all or part of a debt on separate property owned by a spouse
2-26 creates an equitable interest of the community estate in the
2-27 separate property.
3-1 (b) The equitable interest created under Subsection (a) is
3-2 computed by dividing:
3-3 (1) the total amount of the payments made by the
3-4 community estate to reduce the principal of the debt on the
3-5 separate property; by
3-6 (2) the sum of:
3-7 (A) the amount computed under Subdivision (1);
3-8 (B) the total amount of the payments made by the
3-9 separate estate to reduce the principal on the debt; and
3-10 (C) the total amount of any additional amount
3-11 spent by the separate estate to acquire the interest in the
3-12 property.
3-13 (c) For purposes of this section, the cost of any
3-14 improvements made to the separate property paid for by either the
3-15 separate or community estate is included as part of the principal
3-16 of the debt.
3-17 Sec. 3.404. APPLICATION OF INCEPTION OF TITLE RULE. (a)
3-18 This subchapter does not affect the rule of inception of title
3-19 under which the character of property is determined at the time the
3-20 right to the property is acquired. Property owned or claimed by a
3-21 person before or after the existence of a marriage or acquired
3-22 during the marriage by gift, devise, or descent is separate
3-23 property.
3-24 (b) If the community estate and the separate estate of
3-25 either or both spouses have an ownership interest in property, the
3-26 respective ownership interests of the two marital estates in that
3-27 property are determined by the rule of inception of title. The
4-1 respective equitable interests in that property are measured by the
4-2 contributions of each estate.
4-3 Sec. 3.405. EQUITABLE LIEN. The court may impose an
4-4 equitable lien on community or separate property to protect a claim
4-5 of an equitable interest by a separate or community estate.
4-6 SECTION 3. AMENDMENT. Section 7.002, Family Code, is
4-7 amended to read as follows:
4-8 Sec. 7.002. DIVISION OF PROPERTY UNDER SPECIAL
4-9 CIRCUMSTANCES. In addition to the division of the estate of the
4-10 parties required by Section 7.001, in a decree of divorce or
4-11 annulment the court shall order a division of the following real
4-12 and personal property, wherever situated, in a manner that the
4-13 court deems just and right, having due regard for the rights of
4-14 each party and any children of the marriage:
4-15 (1) property that was acquired by either spouse while
4-16 domiciled in another state and that would have been community
4-17 property if the spouse who acquired the property had been domiciled
4-18 in this state at the time of the acquisition; [or]
4-19 (2) property that was acquired by either spouse in
4-20 exchange for real or personal property and that would have been
4-21 community property if the spouse who acquired the property so
4-22 exchanged had been domiciled in this state at the time of its
4-23 acquisition; or
4-24 (3) separate property in which an equitable interest
4-25 of the community estate is created as provided by Subchapter E,
4-26 Chapter 3.
4-27 SECTION 4. EFFECTIVE DATE. This Act takes effect September
5-1 1, 1999, and applies to a suit for dissolution of a marriage
5-2 pending on that date or filed on or after that date.
5-3 SECTION 5. EMERGENCY. The importance of this legislation
5-4 and the crowded condition of the calendars in both houses create an
5-5 emergency and an imperative public necessity that the
5-6 constitutional rule requiring bills to be read on three several
5-7 days in each house be suspended, and this rule is hereby suspended.