💍 What Is Community Property in Real Estate?

Community Property is a form of marital ownership in certain U.S. states where both spouses equally own all property acquired during the marriage, regardless of who earned the income or whose name is on the title. Property owned before marriage or received by gift or inheritance is typically considered separate property.

How Community Property Works

In community property states, assets gained during the marriage are legally owned 50/50 by both spouses. This applies to real estate, income, savings, and most financial assets earned while married.

Key features of community property include:

  • Equal ownership — each spouse owns an undivided 50% interest.
  • Applies automatically — no special paperwork required.
  • Income is shared — wages earned by either spouse are community income.
  • No survivorship (unless titled as community property with right of survivorship).

Nine states follow community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Why Community Property Matters

Benefits:

  • Ensures both spouses share equally in earnings and assets gained during marriage.
  • Often simplifies division of assets during divorce.
  • Can provide tax advantages in some states.
  • Clarifies ownership rights during the sale of a home.

Drawbacks:

  • Debt incurred by one spouse may become shared community debt.
  • Inherited or gifted property may mix with community property if not kept separate.
  • Can complicate ownership when separate and community assets combine.

Example of Community Property

Here’s how community property works in real estate:

  • A married couple buys a home in Texas using income earned during marriage.
  • The home is automatically community property, even if only one spouse is on the deed.
  • If the couple divorces, the house value is split 50/50 unless otherwise agreed.
  • If a spouse dies, their 50% interest generally passes according to their will.

Why Community Property Matters for FSBO Sellers

In community property states, both spouses typically must sign listing agreements, sales contracts, and closing documents, even if only one spouse is on the title.

  • Both spouses usually must authorize the sale of a community property home.
  • Failure to obtain both signatures can delay or invalidate the transaction.
  • Proceeds from a FSBO sale are split as community income.
  • Inherited property may require proof that it remains separate property.

Learn more about ownership structures in Property Ownership Types.

🔗 Related Resources for Buyers & Sellers

Frequently Asked Questions

Is community property the same as joint tenancy?
No. Joint tenancy includes survivorship. Community property does not unless specifically titled that way.

Does community property apply in all states?
No. Only nine states follow community property laws.

Can a spouse sell community property alone?
Usually no — both spouses must sign off on selling community property.

Can separate property become community property?
Yes. If assets mix or are used jointly, they may become community property depending on state law.