Transfer the Marital Home During, Not After, Divorce — Here's Why
Making sure the family house gets properly transferred in a divorce should be high on every lawyer's to-do list, according to Adam Whiteman in the ISBA's November 2017 Real Property newsletter. That means seeing to it that "the property gets quitclaimed and recorded as necessary and…the mortgage is refinanced or…some other agreement is put in place to remove the non-owning spouse from any mortgage that encumbers the property," he writes. Waiting till the divorce is over is asking for trouble.
A few of his tips:
When you represent the spouse receiving the house -
See that the deed is transferred while the case is underway. "It is very difficult to get the opposing party to sign a quitclaim deed to you after the case is closed, and it can be time-consuming and costly to bring the matter back into court."
Make sure the marital settlement agreement matches the deed. Start by examining the deed and not relying on the client's description of how the property is titled, Whiteman says.
Refinance and get the ex's name off the mortgage. One of many reasons this is important: If your client's ex goes bankrupt and is still on the mortgage, the client might not be able to sell the property without filing a motion in bankruptcy court to have the stay lifted, Whiteman says
When you represent the transferring spouse -
Get his or her name off the deed. Otherwise, "if a property tax bill is due, [your client is] liable for it," Whiteman writes.
Likewise for the note and mortgage. As an ex-spouse, even when your name is off the deed, "if your name is still on the note and/or mortgage after the divorce, you are still liable for the debt."
Find out much more in the November Real Property newsletter.
Member Comments (4)
great article
Why would the transferee accept a QC deed? What if the transferor had previously conveyed or encumbered the property?
One more piece of advice: Don't rely on a copy of the vesting deed when preparing the divorce deed. Get a title report showing the status of title. Otherwise, the person signing off might have judgments or other unpleasantness of record that he/she didn't disclose. I learned that the hard way about 30 years ago.
If a spouse refinances while still married, it is likely that the title company and lender will still require the transferring spouse to waive homestead rights on the transferee’s new mortgage as the couple is still legally married. Otherwise, the issue will have to go to an underwriter to determine if the transferring spouse has adequately abandoned the property as homestead. Sometimes, it is just easier to obligate the transferring spouse to sign.