In divorce, it is common for one spouse to want to keep the home. This will require the other spouse to be removed from the title. More often than not, the existing mortgage will need to be refinanced into just the name of the spouse keeping the home. Your divorce lawyer can ensure you are legally protected through this process and we can guide you through this process and help you refinance your mortgage into just your name.
After you have a clear plan for the house and know you can refinance the mortgage on your own, it is important to understand that the transfer/change in title will be handled by a deed. The deed is critical to your transaction. Make sure you have a clear understanding of your options when it comes to the deed.
The deed/title and mortgage are independent of each other. Being taken off the title via a deed does not negate the obligations of the removed spouse if they are on the mortgage. The deed transfers ownership to the spouse keeping the house. The other spouse can be removed from the existing mortgage if the spouse keeping the house can successfully refinance the mortgage into just their name. This is not always possible.
There are several different kinds of deeds, with different levels of authority and protection. Once the ownership has been transferred via the deed, the person removed from the title has no legal right nor access to the property without the permission of the owner, even if they are still on the mortgage.
Transferring Ownership with a Deed
A deed is a document that is used to change the ownership of the property. When selling or gifting property, one must transfer the ownership of the property from the previous owner(s) to the new owner(s). Deeds are recorded in the county courthouse, where a history of the property’s ownership can be accessed.
A grant deed, also called a special warranty deed, offers special guarantees. It guarantees that the property has not been sold to someone else and that the house is not under any liens or restrictions that have not been disclosed to the buyer. A warranty deed is a grant deed with the added guarantee that the seller will defend the title against any third-party claim, including a previous owner.
A quitclaim deed is a quick and easy process for removing one person’s name from the title. It must be notarized and recorded at the county courthouse or it will be considered invalid. Though often used by divorcing couples, a quitclaim can be used between parties other than couples.
An interspousal deed, however, is specific to married couples. It transfers property from one spouse to another, in order to avoid property reassessment or tax liability in transferring ownership. It is not exclusively used for divorcing couples, but that is often the case.
Getting Legal Advice
A divorce and/or real estate attorney experienced in divorce real estate can help with the division of marital real estate. Divorcing couples can make mistakes that cause future problems, for example:
- Choosing the wrong form of deed transfer
- Transferring half the ownership, thinking they only own half the property
- Not having the deed recorded by the appropriate county authority
- Missing important information on the deed that would make it invalid or open up one or both spouses to future litigation
Transferring the Mortgage and the Title
Transferring ownership via the deed does not exempt a person from responsibility for paying the mortgage. This is a completely separate process. The spouse keeping the house will need to refinance the mortgage into just their name so that the other spouse who is no longer an owner of the home (by virtue of the deed transferring ownership) has no further obligation for a mortgage on a house they no longer own. The refinancing spouse must qualify for a new mortgage based upon their own income, credit score, etc.
What to do with the marital home is often one of the biggest decisions in divorce. This decision can be quite contentious since the home is often the largest marital asset. Next Act Properties specializes in real estate solutions for divorcing couples. We can help you determine the best course of action for your particular situation, such as one spouse keeps the house and refinances, the house is sold, or you consider our unique Sale/Leaseback Program.