TEXAS FAMILY CODE
SUBCHAPTER E.  EQUITABLE INTEREST OF COMMUNITY ESTATE
IN ENHANCED VALUE OF SEPARATE PROPERTY
[reflecting changes through Sept. 1, 2003 (78th Leg.)]

§ 3.401. Definitions

In this subchapter:

(1) "Claim for economic contribution" means a claim made under this subchapter.
(2) "Economic contribution" means the contribution to a marital estate described by Section 3.402.
(3) "Equity" means, with respect to specific property owned by one or more marital estates, the amount computed by subtracting from the fair market value of the property as of a specific date the amount of a lawful lien specific to the property on that same date.
(4) "Marital estate" means one of three estates:

(A) the community property owned by the spouses together and referred to as the community marital estate;
(B) the separate property owned individually by the husband and referred to as a separate marital estate; or
(C) the separate property owned individually by the wife, also referred to as a separate marital estate.

(5) "Spouse" means a husband, who is a man, or a wife, who is a woman. A member of a civil union or similar relationship entered into in another state between persons of the same sex is not a spouse.

Added by Acts 1999, 76th Leg., ch. 692, § 2, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.

§ 3.402. Economic Contribution

(a) For purposes of this subchapter, "economic contribution" is the dollar amount of:

(1) the reduction of the principal amount of a debt secured by a lien on property owned before marriage, to the extent the debt existed at the time of marriage;
(2) the reduction of the principal amount of a debt secured by a lien on property received by a spouse by gift, devise, or descent during a marriage, to the extent the debt existed at the time the property was received;
(3) the reduction of the principal amount of that part of a debt, including a home equity loan:

(A) incurred during a marriage;
(B) secured by a lien on property; and
(C) incurred for the acquisition of, or for capital improvements to, property;

(4) the reduction of the principal amount of that part of a debt:

(A) incurred during a marriage;
(B) secured by a lien on property owned by a spouse;
(C) for which the creditor agreed to look for repayment solely to the separate marital estate of the spouse on whose property the lien attached; and
(D) incurred for the acquisition of, or for capital improvements to, property;

(5) the refinancing of the principal amount described by Subdivisions (1)-(4), to the extent the refinancing reduces that principal amount in a manner described by the appropriate subdivision; and

(6) capital improvements to property other than by incurring debt.

(b) "Economic contribution" does not include the dollar amount of:

(1) expenditures for ordinary maintenance and repair or for taxes, interest, or insurance; or
(2) the contribution by a spouse of time, toil, talent, or effort during the marriage.

Added by Acts 1999, 76th Leg., ch. 692, § 2, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.

§ 3.403. Claim Based on Economic Contribution

(a) A marital estate that makes an economic contribution to property owned by another marital estate has a claim for economic contribution with respect to the benefited estate.

(b)  The amount of the claim under this section is equal to the product of: 

(1)  the equity in the benefited property on the date of dissolution of the marriage, the death of a spouse, or disposition of the property;  multiplied by
(2)  a fraction of which:

(A)  the numerator is the economic contribution to the property owned by the benefited marital estate by the contributing marital estate;  and
(B)  the denominator is an amount equal to the sum of:                    

(i)  the economic contribution to the property owned by the benefited marital estate by the contributing marital estate;  and
(ii)  the [equity in the property as of the date of the marriage or, if later, the date of the first economic contribution by the contributing estate;  and
[(iii) the economic] contribution [to the property] by the benefited estate to the equity in the property owned by the benefited estate [during the marriage].

(b-1)  The amount of the contribution by the benefited marital estate under Subsection (b)(2)(B)(ii) is measured by determining:

(1)  if the benefited estate is the community property estate:      

(A)  the net equity of the community property estate in the property owned by the community property estate as of the date of the first economic contribution to that property by the contributing separate property estate;  and
(B)  any additional economic contribution to the equity in the property owned by the community property estate made by the benefited community property estate after the date described by Subdivision (A); or

(2)  if the benefited estate is the separate property estate of a spouse:

(A)  the net equity of the separate property estate in the property owned by the separate property estate as of the date of the first economic contribution to that property by the contributing community property estate or the separate property estate of the other spouse; and
(B)  any additional contribution to the equity in the property owned by the separate property estate made by the benefited separate property estate after the date described by Subdivision (A).

(c) The amount of a claim under this section may be less than the total of the economic contributions made by the contributing estate, but may not cause the contributing estate to owe funds to the benefited estate.

(d) The amount of a claim under this section may not exceed the equity in the property on the date of dissolution of the marriage, the death of a spouse, or disposition of the property.

(e) The use and enjoyment of property during a marriage for which a claim for economic contribution to the property exists does not create a claim of an offsetting benefit against the claim.

Added by Acts 1999, 76th Leg., ch. 692, § 2, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.

§ 3.404. Application of Inception of Title Rule; Ownership Interest Not Created

(a) This subchapter does not affect the rule of inception of title under which the character of property is determined at the time the right to own or claim the property arises.

(b) The claim for economic contribution created under this subchapter does not create an ownership interest in property, but does create a claim against the property of the benefited estate by the contributing estate. The claim matures on dissolution of the marriage or the death of either spouse.

Added by Acts 1999, 76th Leg., ch. 692, § 2, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.

§ 3.405. Management Rights

This subchapter does not affect the right to manage, control, or dispose of marital property as provided by this chapter.

Added by Acts 1999, 76th Leg., ch. 692, § 2, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.

§ 3.406. Equitable Lien

(a) On dissolution of a marriage, the court shall impose an equitable lien on property of a marital estate to secure a claim for economic contribution in that property by another marital estate.

(b) On the death of a spouse, a court shall, on application for a claim of economic contribution brought by the surviving spouse, the personal representative of the estate of the deceased spouse, or any other person interested in the estate, as defined by Section 3, Texas Probate Code, impose an equitable lien on the property of a benefited marital estate to secure a claim for economic contribution by a contributing marital estate.

(c) Subject to homestead restrictions, an equitable lien under this section may be imposed on the entirety of a spouse's property in the marital estate and is not limited to the item of property that benefited from an economic contribution.

Added by Acts 1999, 76th Leg., ch. 692, § 2, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.

§ 3.407. Offsetting Claims

The court shall offset a claim for one marital estate's economic contribution in a specific asset of a second marital estate against the second marital estate's claim for economic contribution in a specific asset of the first marital estate.

Added by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.

§ 3.408. Claim for Reimbursement

(a) A claim for economic contribution does not abrogate another claim for reimbursement in a factual circumstance not covered by this subchapter. In the case of a conflict between a claim for economic contribution under this subchapter and a claim for reimbursement, the claim for economic contribution, if proven, prevails.

(b) A claim for reimbursement includes:

(1) payment by one marital estate of the unsecured liabilities of another marital estate; and
(2) inadequate compensation for the time, toil, talent, and effort of a spouse by a business entity under the control and direction of that spouse.

(c) The court shall resolve a claim for reimbursement by using equitable principles, including the principle that claims for reimbursement may be offset against each other if the court determines it to be appropriate.

(d) Benefits for the use and enjoyment of property may be offset against a claim for reimbursement for expenditures to benefit a marital estate on property that does not involve a claim for economic contribution to the property.

Added by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.

§ 3.409. Nonreimbursable Claims

The court may not recognize a marital estate's claim for reimbursement for:

(1) the payment of child support, alimony, or spousal maintenance;
(2) the living expenses of a spouse or child of a spouse;
(3) contributions of property of a nominal value;
(4) the payment of a liability of a nominal amount; or
(5) a student loan owed by a spouse.

Added by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.

§ 3.410. Effect of Marital Property Agreements

A premarital or marital property agreement, whether executed before, on, or after September 1, 1999, that satisfies the requirements of Chapter 4 is effective to waive, release, assign, or partition a claim for economic contribution under this subchapter to the same extent the agreement would have been effective to waive, release, assign, or partition a claim for reimbursement under the law as it existed immediately before September 1, 1999, unless the agreement provides otherwise.

Added by Acts 2001, 77th Leg., ch. 838, § 2, eff. Sept. 1, 2001.