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What Happens When Spouses do not Change the Real Estate Deed at the Divorce?
When a couple who owns property together divorces, the court issues a judgment order, also known as a divorce decree. This document divides marital assets but does not transfer real estate ownership from one party to the other. Many couples do not realize they should apply for a new deed if one will continue to own the home and live in it while the other moves elsewhere. Unfortunately, this can present problems years down the road.
Assume that you married someone who had been married before, and you moved into the home he once shared with his ex-wife. The two of you live in the house for many years after your marriage and eventually pay it off in full.
In another scenario, you and your spouse decide to refinance the mortgage on the home you have shared for years. You do not discover that the deed still lists his ex-wife’s name until you attempt to finalize a real estate transaction.
Can you Keep a House in Both Names after Divorce?
It’s possible to keep a house in both names after a divorce. This process is known as co-ownership or joint ownership post-divorce. However, there are both benefits and drawbacks to this decision.
Co-ownership is helpful when neither of the parties can afford to buy out the other or if refinancing is not feasible. This will allow both parties to continue to share the costs. If children are involved in the divorce process, joint ownership is an excellent alternative to prevent disruption of children’s lives to a minimum.
Additionally, some couples may hold onto the property jointly until market conditions improve and they can get a better sale price.
On the other hand, joint ownership ensures that both parties remain financially tied. If one party fails to contribute to ongoing expenses like the mortgage, taxes, or repairs, the other might have to cover these costs. This can lead to disagreements on property maintenance, whether to sell the property or when and how to refinance. If there is a delay in payment, both parties’ credit scores might be affected. Therefore, this option must be carefully thought out.
What Happens to the House When Your Ex-Spouse Dies?
If you’re in a situation where you’ve divorced, but your name is still on the deed, and your spouse dies, various factors come into play in determining the house’s fate.
There is a will
If your ex-spouse had a valid will or trust, the property will typically be distributed according to those documents. You can still be a beneficiary if the will was not updated after the divorce.
There isn’t a will
If there isn’t a will, you, as the ex-spouse, will not inherit the property deed. Instead, it would be inherited in the following order of priority:
Children
Surviving spouse
Parents/siblings
Grandparents, aunts, uncles, or their descendants.
If none of the previous apply, the house will become the state’s property.
Joint Ownership
If the house was jointly owned, with rights of survivorship, and your former spouse died, the house might automatically pass to the surviving co-owner (you), even if a will says otherwise.
What if my Former Spouse is on the Deed but not the Mortgage?
If your spouse is on the deed but not the mortgage, they own the house but are not liable for the mortgage loan and the resulting payments. Even if you are the only one making mortgage payments, your wife still has the right to live in the house as she is a legal property owner.
Additionally, if your wife wants to sell the house, she can do so without your permission unless you are both on the property's title. In this case, you both must sign the paperwork to sell the house. Lastly, she will inherit the house according to property division even if she is not on the mortgage.
How to Remove Your Ex-Wife/Spouse from the Deed
Transferring ownership of a piece of real estate to only one spouse involves the following steps:
Read the divorce decree carefully to determine who has a legal right to the property.
Contact the county recorder’s office to obtain a copy of the real estate deed.
Locate a blank form to complete a new deed and transfer ownership from the couple to only one of the spouses. These forms are typically available online. Both spouses should sign the new document in the presence of a notary public.
Submit an original copy of the new deed to the county recorder’s office and obtain a copy for recordkeeping purposes.
Quitclaim deed transferring is the most popular type of real estate deed used by divorcing couples to transfer ownership to one party.
Quitclaim Deed
Quitclaim deeds are documents that remove one spouse’s name from the deed to the house.
The spouse who will no longer have a legal claim to the property releases their claim to the other spouse, hence the name quitclaim. Most divorcing couples prefer to use it since it does not provide either party with a warranty of title.
However, a common mistake people make when going through a divorce is for the spouse to move out of the home to assign half the interest to the other spouse. This is incorrect because it still leaves the former couple in a co-ownership situation.
How is a Quitclaim Deed different from a Warranty Deed?
Unlike a Warranty Deed, a Quitclaim Deed offers no guarantees or warranties that the title is clear. It only transfers any interest the grantor might have in the marital property.
Is a Quitclaim Deed Effective Immediately?
Yes, a Quitclaim Deed is effective immediately once signed and delivered to the grantee. However, recording the deed to provide public notice of the transfer is essential.
How do I File or Record a Quitclaim Deed?
After signing, a Quitclaim Deed should be filed or recorded in the local county recorder’s office or county courthouse where the property is located. A divorce attorney should be able to handle this process on your behalf.
Does a Quitclaim Deed Transfer Mortgage Responsibility?
No. A Quitclaim Deed only transfers ownership interest. If there’s a mortgage on the property, the original borrower remains responsible for the mortgage payments.
Does a Quitclaim Deed Guarantee that the Property is Free from Liens & Claims?
No, a Quitclaim Deed only transfers the grantor’s interest and does not guarantee that the property is free from liens or claims.
Pitfalls to Avoid
Fractional Interest Transfer
When transferring property, ensure the entire property is transferred, not just a fractional interest. Some mistakenly think transferring half the property is the solution, which can create issues later.
Overlooking Homestead or Community Property Rights
Especially in states like Texas, California, and Florida, there are specific property rights to be aware of. Always consult local regulations and experienced attorneys to guide you.
Not Referring to the Divorce Decree in the New Deed
Make it a practice to cite the divorce decree in the new deed, as it provides a clear link between the divorce proceedings and the property division.
Conclusion
Removing a former spouse’s name from a deed can present legal issues when that person refuses to cooperate, cannot be located, or has passed away. You and your spouse will want to contact a family attorney in any of these situations. Baystate Law Group specializes in family and real estate law and is here to help. Please request a consultation today.