Understanding the use of quit claim deeds in divorce

In a divorce or legal separation, a quit claim deed is often used to fulfill the requirements of the property division.

The basics of title to real property

To understand the effect of a quit claim deed in a divorce or legal separation, it is helpful to understand the various types of ownership. Joint ownership by spouses will be in one of the following forms (depending upon your state and how the title was set up when you acquired the property):

• Joint tenancy. You and your spouse own the property together. If one of you dies, the property automatically goes to the other. It is also often called joint tenancy with rights of survivorship. Joint tenancy can be used any time two or more people own property—it is not limited to spouses.

• Tenancy by the entireties. This is the same as joint tenancy but only applies between spouses. It is not used in all states.

• Tenancy in common. This is also used when two or more people own property. If one of the owners dies, that person's interest in the property goes to his or her heirs—not automatically to the other owner(s), as with the other two types of joint ownership.

Most married couples hold property as either joint tenants or as tenants by the entirety. However, it is not unheard of for a married couple to hold property as tenants in common.

What is a quit claim deed in a divorce?

A quit claim deed is used in a divorce to change joint ownership into sole ownership. It transfers sole title to the party who is awarded that property. In dividing property between the parties, there are two options:

1. Order the property sold and the proceeds divided between the parties, or

2. Award the property to either spouse. An award of a parcel of real property to one of the parties can be done either by the agreement of the parties (a settlement agreement) or by a court order (if the judge divides the property).

If one party is going to keep the property, a quit claim deed is used to remove the other party's name from the title. If a legal separation is allowed in your state, a quit claim deed in a separation case is also appropriate.

What does a quit claim deed accomplish?

If two people hold title to a property, whether as tenants in common, joint tenants, or tenants by the entireties, both must agree in order to sell, mortgage, or will the property. A quit claim deed in a divorce or legal separation gives one party the sole ownership of the property. This allows that party to sell or mortgage the property without the approval or consent of the other party. It also allows that party to execute a will to give the property to anyone he or she desires.

How does a quit claim deed affect a mortgage?

If you and your spouse jointly own the property, both of you are most likely obligated on the mortgage. If your spouse is being awarded the property, you are probably wondering, "How do I get my name off the mortgage after divorce?"

In a divorce, the ownership of the property and the debt owed for that property are two separate issues. One factor that may come into play is whether the party who is awarded the property is also given primary physical custody of any children. Regarding the debt on the property, the three most common results are:

1. One party is awarded the property, and is ordered to pay the mortgage and other expenses associated with the property (e.g., taxes, maintenance, and insurance);

2. One party is awarded the property, and both parties are ordered to share in the payment of the mortgage and expenses; or

3. One party is awarded the property, and the other party is ordered to pay the mortgage and expenses.

Assuming that the divorce settlement agreement or judgment requires your ex-spouse alone to pay the mortgage, it does not, however, require the mortgage holder to release you from the loan obligation. Once you get the final judgment, you can contact the lender, explain the situation, and ask if it is possible to be released from the obligation.

However, since having two people to go after in the event of default is better than only having one person, it is unlikely that the lender will release you. If your ex-spouse defaults on the mortgage, the lender will join both of you in a foreclosure lawsuit.

If your ex-spouse defaults, your recourse will be to go back to the court that granted the divorce. While the court cannot release you from the mortgage, it can order your ex-spouse to reimburse you for anything you need to pay to the lender or restructure the property division to compensate you.