Oct 11, 2019

Transferring your interest in the former marital residence to your ex or soon to be ex-spouse? You are moving to another place? Good- an agreement has been reached and you can move on. Be careful before you sign a Quit Claim Deed (QCD).

One of the most common mistakes we see: one party is keeping the house after the divorce. The other party moves out and is willing to transfer their interest in the home to the other spouse who is keeping the home. The QCD transfers all of your interest in the home to the other party. That may be exactly what you want to do. However, the agreement with your spouse in your divorce decree is totally separate from the contract you entered with the bank when you took out your mortgage. The bank does not care if you are divorced. If your ex or soon to be ex-spouse defaults on the mortgage payments, the bank can and will go after you. If your ex-spouse is late with the mortgage payment, and your name is still on that mortgage, your credit report will be affected.

Yes, your divorce decree may contain language that your ex-spouse will indemnify you from any liability on the mortgage. Be careful. The bank does not care what your divorce agreement says. You entered into a contract with the bank and the bank will hold you to it.

Practice Tip:

If you are not keeping the house, sign the QCD only after you have written documentation from the mortgage company showing that your name is no longer on the mortgage. If your spouse is keeping the home and is supposed to re-finance the home to get your name off of the mortgage, be sure your final written agreement is clear on the time frame the refinance must take place and what will happen if your ex-spouse is unable to re-finance or otherwise get your name off of the mortgage within that time frame. Protect yourself.

Written By Grunyk Family Law Founder Attorney Danya Grunyk