When you divorce, you must decide, or allow the judge to decide, how your marital property will be divided in a Washington Divorce. Often, when you are divorcing, you already have equity in your home, and that equity must be accounted for in your property division. Sometimes, one spouse will choose to remain in the marital home, which means removing the other spouse’s name from the deed and handling how the mortgage will get paid going forward.
There are a few ways to transfer the deed and the mortgage responsibility. A property division lawyer specializes in helping people find creative ways to settle the division of property and other assets. Let’s look at quit claim deeds and refinancing as tools for accomplishing the goal of transferring property from both names into one name.
Understanding the Basics of Property Titles
The term joint ownership seems self-explanatory; however, more than one type exists. Joint ownership can be accomplished in one of the following ways depending on how the title was created when you initially purchased the property.
- Joint tenancy: Both spouses own the property together, and if one dies, the other automatically gets the property. Joint tenancy isn’t limited to spouses; it can be used when two people simply purchase a property together.
- Tenancy by the entireties: This term means the same as joint tenancy, but it only applies when the couple is married. The term isn’t used in every state.
- Tenancy in common: Two or more people own the property, but if one owner dies, their interests in the property transfer to their heirs rather than to the other owners.
Most of the time, married couples have property as either joint tenants or tenants in the entirety. Property deeds for married couples will occasionally be written, so the couple is considered tenants in common, however.
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What Is a Quit Claim Deed?
Quit claim deeds transfer the sole title of a property to the person who has been awarded the property in the divorce. It changes ownership from joint ownership to sole ownership. In a divorce, there are two ways of dividing property between the divorcing parties:
- Require the property to be sold with the proceeds divided between the parties
- Awarding the property to one of the spouses either via an agreement or court order.
If one spouse keeps the property, the other party’s name is removed with a quit claim deed. In states allowing legal separation, quit claim deeds can also be used during separation and after a divorce.
What Does a Quit Claim Deed Do in a Washington Divorce?
Two people who hold the title to a property must both agree to a mortgage, sell, or bequeath the property in a will. When those people divorce, the quit claim deed gives one person sole property ownership. Sole ownership means they can mortgage, sell, or bequeath the property in a will without getting approval from the other party.
When a quit claim deed is used to transfer property ownership from one party to another, it doesn’t guarantee the title. So, the person receiving the quit claim gets whatever interest the other person had in the property, but the person granting the deed will not be held responsible for any issues with the title. For instance, if the person giving the quit claim deed didn’t own the property, the recipient can’t sue them for failing to provide a clear title. A quit claim deed in Washington is the least risky to the person granting it and the least protective to the one receiving it.
Quit Claim Deeds and Mortgages in a Washington Divorce
Spouses who own property jointly are typically both obligated to pay the mortgage. If one spouse is awarded the property, that leads to the question of how the other relinquishes responsibility for paying the mortgage.
When parties divorce, ownership of a property and the debt incurred by owning the property are considered two separate issues. One thing that is also considered when determining who is responsible for the debt is whether the person who received the property also has primary physical custody of the children of the marriage. There are three common ways to handle the debt associated with physical property in a divorce. Those are as follows:
- One spouse is awarded ownership of the property and also becomes solely responsible for paying the mortgage and other expenses associated with property ownership.
- One spouse is awarded the property, but both spouses are ordered to share the responsibility for paying the mortgage and expenses.
- One spouse is awarded the property, and the other is ordered to pay the mortgage and related expenses.
Having one spouse ordered to pay the mortgage doesn’t require the mortgage lender to release the other party from their responsibility. When the parties receive the final judgment, they can contact the lender on their own. Sometimes, you can explain the situation to the lender and be released from the contract.
However, don’t expect the lender to automatically agree to release the party who didn’t have the debt assigned to them. From a purely business point of view, mortgage lenders would rather have two people to attempt to recover money from if there is a default than have a single person responsible. If the lender doesn’t agree to release you and your ex-spouse defaults on the mortgage, both of you will be named in the foreclosure proceedings.
If your mortgage lender hasn’t released you from the debt and your ex-spouse defaults, your best course of action will be to return to the court that granted your divorce. The judge won’t be able to release you from the mortgage, but they can order your ex-spouse to give you the money needed to pay the lender or to restructure the property division so you are compensated.
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Refinancing the Mortgage After Washington Divorce
Before refinancing the mortgage after a divorce, you must first know which name or names are on the title and which are on the mortgage. These aren’t always the same. For example, if someone didn’t have reportable income when you applied for the mortgage, you might have chosen to have that person alone apply for financing.
The names on the mortgage indicate who is responsible for paying the debt associated with owning the property. The names on the title indicate who legally owns the property, so it’s possible for both people to be on the title but not the mortgage or vice versa. There are two ways to remove an ex-spouse from the title of the home after a divorce.
The quit claim deed allows one spouse to sign their ownership of the property over to the other spouse. Before you can refinance the home, you must acquire a quit claim deed from your ex-spouse. The other way to remove your ex-spouse from the title of the home is to sell the house. Sometimes, it simply makes more sense to sell the property and split the proceeds so both people can move forward after the divorce.
If the lender won’t issue a release of liability to the spouse who no longer has ownership of the home, the option that’s left is refinancing. When you choose to refinance your mortgage after a divorce, you must qualify for the loan on your own, which means your credit, income, and assets must meet lender qualifications. You might also need to ensure that alimony or child support payments are considered when the decision is made about your refinance approval.
Reasons to Refinance Your Home After Divorce
Refinancing the marital home after divorce makes sense for several reasons.
- The spouse who no longer has ownership of the home needs to purchase a new home. Removing them from the mortgage on the marital home reduces their debt-to-income ratio, which will make securing a new mortgage easier for them.
- If the ex who keeps the house defaults on the loan, it can damage the other person’s credit as well if they are both still on loan. Refinancing and removing your name from the mortgage will protect your credit from harm if your ex is responsible for the mortgage.
- If there is equity in the home, one way to divide assets is to refinance with a cash-out mortgage plan. For example, if you want to keep the house but need money to pay your ex for their portion of the home, a cash-out refinance could be the way to go because it can allow you to get money from the equity to buy out your ex-spouse.
Don’t Put Off Consulting with an Experienced Washington Divorce Lawyer
When you get a divorce, you are faced with the issue of dividing your marital property equitably. When it’s time to decide who gets the house, you should be aware of both whose name is on the title and whose name is on the mortgage. A quit claim deed is one way to remove one spouse’s name from the title to the property, but it doesn’t remove a name from the mortgage. One way to ensure that a name is removed from both the title and the mortgage is to refinance the mortgage so only the person who is responsible for paying the bill is named on the mortgage.
If you’d like more information about a quit claim deed and whether it’s appropriate for your case, contact the lawyers at Aberdeen Law Firm for more information.
Related Content: The Ultimate Guide To Divorce in Washington