Does Signing a Quitclaim Deed in My Divorce Take Me Off the House Financing?
No. One of the major categories which can be at issue in any divorce case is the division of marital property. Marital estates vary from family to family, with all different sorts of property ranging from real estate, to bank accounts, to cars, to retirement accounts, to investment accounts, and more. One of the most common assets Colorado divorce clients may have is a home. In any divorce case in which the marital home is at issue, there are three possible conclusions. Either the husband will keep the house, the wife will keep the house, or the home will be sold. In most families, the home is going to be jointly financed. Generally, there is one mortgage, but some people do have second mortgages or home equity lines of credit (HELOC’s) on their home as well. When the parties are selling the marital home the issue of financing is resolved upon sale and both parties are removed by virtue of the sale. However when one party or the other is keeping the marital home and that home is finances in both parties’ names, there are various things to consider.
Until speaking to a Denver divorce attorney, there are many misconceptions that people have related to dividing up the marital home. One of those ties into titling and the interplay it has with the financing. People sometimes mistakenly believe that court orders regarding disposition of a home are binding on a mortgage company and that entry of those orders is the end of the story. To be clear, the entry of orders allocating the marital home to one party has no effect whatsoever on the actual, existing financing of the marital home or the obligations of the mortgage company. Thus, the party not keeping the home should be aware of various concepts tied into the home, post-divorce.
When one party is keeping a home that is jointly titled, there may or may not be equity to divide. When that home is jointly financed, the other party should be cognizant of the fact that there will be two items, financing and titling, which need to be dealt with to fully effectuate the court orders. As relates to titling, the party losing their interest in the home is going to need to transfer title, which will generally be done via a quitclaim deed. The quitclaim deed essentially transfers that party’s ownership interest in the home to the other party. What parties to a divorce case need to be aware of is that signing a quitclaim deed does not remove them from the mortgage.
Understanding the concepts of titling and financing is imperative to making sure you have detailed orders tied into your marital home. As issues of deed transfer and the mortgage will generally arise, it’s also important to structuring the timing or order of sequence of things.
If you find yourself in the position of your spouse getting the marital home that is jointly titled and financed, your signing a quitclaim deed will be necessary as part of the process to remove you from the financing on the home. It is advisable to include specific language in your orders indicating that the quitclaim deed will be executed as part of the refinancing process. This give you power in the equation should issues arise tied into that refinancing and the property in general. This holds true even more so when you are also going to be realizing equity from the home.
When formulating orders tied into disposition of the marital home, it is normal for the person keeping the house to have 3 to 6 months to refinance. Your orders should have provisions requiring sale in the event that refinance does not occur. Additionally, your orders should contain provisions related to missed mortgage payments prior to refinance. In most cases, the person keeping the house will be required to make mortgage payments until refinance occurs. Having orders regarding sale upon a missed payment is also important. If sale becomes required you may want to have a continued say in the process. Keeping yourself on the title as long as you can may provide some power in the equation. Understanding your rights and options both before and after the decree of dissolution of marriage enters can save headaches down the road related to both financing and the transfer of title via the quitclaim deed.