Many home deeds belong to couples. When couples separate, what happens to their deeds? And what can you do to protect your interests if you’re a homeowner who could be headed for divorce? Here, we take a look at a few of the biggest issues.
Dealing With the Mortgage Before Giving Up the House
Divorce is stressful enough. The last thing you need is a deed-related debacle because you left the marital home — and nobody’s paid the mortgage since.
Let’s start right off with the worst-case scenario. If your former home goes into foreclosure and you’re still on the mortgage, the mortgage company does not want to hear about your divorce. If you’re still on the mortgage, the lender wants you to address the responsibility you signed up for, and pay the debt.
Does this really happen? Now and then it does. The court order for a divorce might say who gets the house, but by itself it does not transfer the home or address the mortgage.
Yet transferring ownership to an ex is easily done. At its most basic, a quitclaim deed is all it takes.
The trickier part is getting your name off any debts that are tied to the home. If you give up your interest in the marital home before your name comes off the loans, you will have no access to the asset, yet remain responsible for the debts.
So, to prepare for a property transfer, consult with your divorce lawyer about the right actions to take, in the right order.
Both the lender and your ex might formally agree that your ex can assume your loan. If your loan can be assumed, your ex might be able to continue paying it off under the same terms. If so, the loan will stay in place; your name, though, will come off. In the more common situation, your spouse will need to refinance the home and take out a new mortgage loan alone, or sell the home. The divorce decree might specify a certain amount of time, such as two years, for your ex to refinance and take your name off the mortgage. Avoid signing a quitclaim deed until that happens.
The bottom line? Be sure the lender releases you from the original loan before you sign a deed over. If there is a need for you to sign the deed over to your ex to allow the refinancing or home sale to go forward, consult with your lawyer for advice on how to protect your interests.
Actions to Take if You Have Already Signed Over Your Deed
If you have already transferred your interest in a home without ending your mortgage responsibility, again, the thing to do is consult with a lawyer. The lender just wants the payments, and has no interest in the payer’s divorce status. If your ex is making the monthly payments, you might even be benefiting from a subtle credit score lift. But the day your ex stops paying is the day your credit is at serious risk. One day you might find out there’s a collection agency on your case, looking for repayment.
You might ask why you’d need a lawyer for this situation. Shouldn’t the bank just release you from the mortgage? That would be nice, but the bank probably won’t, unless:
- You can get a court order directing the mortgage lender to release you.
- Your loan agreement expressly requires the lender to let you off the mortgage if there is a deed change. This could possibly occur in an owner-financed loan.
If the home is already in foreclosure, call the lender as soon as possible to work out an agreement that will satisfy the loan. Will it do any good to sue your ex? It all depends. Your lawyer can examine the documents and case-specific facts to advise you.
Enforcing the Divorce Decree: When Your Ex Refuses to Sign the Quitclaim
In this scenario, imagine that the divorce court has awarded you the marital home. That’s fine, but a court’s divorce decree does not, by itself, transfer the home. That takes another step: signing over the deed. Now, you’re waiting. What if your former spouse doesn’t cooperate?
Check your divorce judgment or settlement agreement. Does it direct your ex to sign a quitclaim deed? Does it direct each spouse to take the necessary actions to carry out the court-ordered division of property? Then your ex must sign a quitclaim deed to release the property interest to you. If necessary, your lawyer can go back to court and ask for enforcement through a court-ordered quitclaim, which involves either:
- Holding your ex in contempt of court in order to compel the signing.
- Transferring your ex-spouse’s property interest to you by court order in lieu of a quitclaim deed.
The court clerk will schedule your hearing. Your lawyer will send the relevant documents and notice of the hearing to your ex-spouse’s representative. On the day of the hearing, your lawyer will bring an unsigned quitclaim deed to the court. The judge will need to confirm that you were awarded the home, but your spouse has not signed a quitclaim deed upon request. Your ex will likely need to sign the deed in court.
“Formerly Known As…”: A Name Change and the Real Estate Deed
If you’re getting a divorce, you might decide to change your name — during the divorce, or at some point later. Update your official identification cards and documents, so you can present appropriate ID in addition to your court name change order when dealing with real estate matters.
You may not need to change the deed. If your current legal name differs from the way it appears on your deed, the stamped copy of a court order reflecting your name change proves your identity. Check with the county recorder’s office regarding an Affidavit of Identity, which can be notarized and filed to affirm your name change for the county record.
If you need to file a quitclaim deed to change your name on your deed, the grantor named on the deed will be your former name; the grantee will be your current name. Check with your title company before changing your ownership documents. The title insurance firm can advise you on how it expects “Formerly Known As” documents to be prepared.
It’s important to be clear with other interested parties about what you are doing, too, so the lender doesn’t view the change as triggering an acceleration of the loan due date, and so you don’t end up paying transfer taxes. This is an example of using a quitclaim to clarify ownership, not to change it.
Once you file your quitclaim deed with the recorder of deeds, anyone who does a title search will pull up your new legal name when they retrieve your deed.
The Importance of Good Advice
Anyone may prepare a quitclaim deed and transfer their interests in the property they own. That said, to receive guidance through a divorce-related decision, do consult with your attorney, discuss your circumstances, and let the attorney apply the law to your situation for you. While this article can serve as a guide to help you spot issues and options, neither this website nor any other is a substitute for case-specific advice within a lawyer-client relationship. A meeting with your own attorney is essential for making decisions than can impact your legal rights and duties before, during, or after your divorce.
The root meaning of the word divorce is to divert. And to divert is to change course or find a new destination. Divorce, in this sense, is not an end, but the beginning of a new direction. Protect what’s valuable to you, and may your new direction ultimately bring many new sources of joy and beauty into your life.
Photo credit: Hutomo Abrianto via Unsplash.