When spouses divorce, they must divide their real estate. The most common way to do this is to use a quitclaim deed to strike an ex-spouse’s name from the property deed.
Although executing a quitclaim deed may transfer your ownership interest in the home to your ex-spouse, it does not exempt you from your mortgage. If your ex-spouse defaults on the mortgage, the bank may foreclose on the property because it is still secured. This can have disastrous effects on your finances:
How to protect yourself when dividing mortgaged property during a divorce is covered in this article. See How to Remove an Ex-Spouse from a Deed for details on how to divide real estate upon divorce.
The Problem: Mismatch Between Ownership and Mortgage Liability
When couples buy a home, they typically finance it through a bank. The bank loan is secured by the property. The legal document used to secure the property is known as a mortgage in some states. In others, it is called a deed of trust.
A mortgage or deed of trust might not correspond to the property’s title. This might happen, for instance, if both spouses were initially listed on the loan documents but only one of them ended up with the property after the divorce. One spouse will be the property’s owner in this scenario, but both spouses may still be liable for the loan.
An ex-spouse is liable for any debt on a property that he or she does not own if they are still listed on the mortgage even though they no longer own it. If payments are not made, the credit bureaus may report this to the spouse’s credit report.
The Solution: Release or Refinance
An ex-spouse will typically want to be dropped from the loan when they are dropped from the property’s title. In the event that the ex-spouse defaults on payments or the mortgage is foreclosed upon, this shields the ex-spouse (and his or her credit) from liability. Release and refinancing are the two options available to remove an ex-spouse from a loan.
When the release or refinancing is not carried out during the divorce, problems can occasionally occur. Before cooperating in the transfer and/or release of the loan, an uncooperative ex-spouse may attempt to demand additional payment. These illogical demands frequently violate the terms of the divorce judgment and could subject the uncooperative spouse to legal consequences. In this case, the partner desiring cooperation might try to have the antagonist declared in contempt of court for disobeying the court’s order.
Frequently Asked Questions about Mortgages and Divorce
How to arrange the mortgage after a divorce is a concern for many divorcés. Here is a list of frequently asked questions and their responses.
What if I divorce and the mortgage is in my name only?
Much depends on whether you are keeping the property in the divorce if you are divorcing and the mortgage is in your name only. Get a quitclaim deed transferring ownership of the property to you if that is the case. You will own the entire property and be liable for the entire mortgage once the quitclaim deed is filed.
If you are not keeping the property but have a mortgage in your name (i e. ex must either refinance or take over the loan if they are receiving the property as part of the divorce. Make sure to do this soon after the divorce with extreme caution. Without it, your ex could abandon the house with no repercussions, leaving you with the choice of paying the mortgage on a house you do not own or suffering the consequences.
What if my name is on the deed but not on the mortgage and I divorce?
Your ex will probably demand that you refinance the property or take on the mortgage if you are the spouse who is keeping the home. Otherwise, even though you will be the property’s owner, your ex is still liable for the mortgage.
Does a quitclaim deed remove or release me from the mortgage or loan?
No. A quitclaim deed deals only with title to the property. Property ownership differs from lender liability. The deed recorded in the land records serves as proof of property ownership. Your loan documents, as well as any mortgage or trust deed that has been recorded in the land records, will determine your responsibility to the lender.
You may be released from the deed without being released from the loan. This frequently occurs when a divorcing couple executes a quitclaim deed without mandating that the lender release the spouse who no longer owns the property as a condition of the transfer. You might be liable in this situation for debt on property that you do not own. If your ex-spouse fails to make loan payments, the lender may still take legal action against you.
What should I do to get removed from the loan to the property?
Obtain a release from the lender. Most lenders will release you from the loan provided that your spouse has good credit and that you are not in default on the loan. Before you sign the quitclaim deed to the property, speak with your lender to find out if there are any specific requirements. Additionally, check with your divorce lawyer to make sure that your divorce decree and/or settlement agreement contain provisions stipulating that you must be released from the loan documents before you can transfer the real estate.
What should I do if I have signed a deed but I am still on the loan documents?
Find out first if your lender will simply release you from the loan by getting in touch with them. Deliver the final divorce judgment and any relevant settlement agreement to your lender. Additionally, deliver a copy of the quitclaim deed that has already been signed and recorded to the land records to the lender. With this knowledge, the lender ought to cancel the loan for you.
Contact the divorce lawyer who handled the divorce if the lender won’t release you. Find out if a lender release was necessary as a condition of the property transfer in the divorce documents. Additionally, find out if an indemnity clause to shield you from obligations of your ex-spouse was included in the divorce documents. This indemnity clause may enable you to file a lawsuit against your ex-spouse for failing to uphold his or her obligations if your ex-spouse has defaulted and his or her creditors are now looking to you.
Do I need to refinance after a divorce?
Not usually. If you have good credit, the lender will frequently let you take over the loan or release your spouse from it. But if either choice presents issues, you might need to refinance in order to drop your ex-spouse from the mortgage.
FAQ
How do I get my name off a mortgage with my ex?
To do this, you typically file a quitclaim deed in which your ex-spouse relinquishes all ownership interests in the property. Before a notary, your ex should sign the quitclaim deed. You file this document with the county after having it notarized. This formally strikes the ex-partner’s name from the mortgage and title to the property.
How can I remove myself from a mortgage?
- Co-owner refinances after quit claim deed.
- Sell the property and pay off or settle mortgage debt.
- Quit claim house to co-owner and file bankruptcy.
How do I get my spouse’s name off the mortgage?
Getting Your Spouse’s Name Removed From Your Mortgage There is only one way to do this: You must apply for a loan to refinance the mortgage in your name alone. Because both of your names were on the original mortgage, the lender had two possible sources of repayment.
How much does it cost to file a quit claim deed in New York?
Fees for filing a quitclaim deed in New York While some of the filing fees are the same from county to county, others vary. For residential or farm property, the basic filing fee for a quitclaim deed is $125, while the fee for all other property is $250 as of 2018.