Quitclaim Deed in Divorce: What It Does and Doesn't Do

In a divorce or legal separation, a quitclaim deed is often used to fulfill the requirements of the property division. This article explains what a quitclaim deed accomplishes, how it affects your mortgage obligations, and what options you have if your ex-spouse defaults on payments.

What is a quitclaim deed in a divorce?

A quitclaim deed is a legal document that transfers one spouse's ownership interest in real property to the other spouse, converting joint ownership into sole ownership.

When dividing property between parties, courts typically use one of two options.

• Sell the property: The court orders the property sold and proceeds divided between the parties.
• Award the property: One spouse receives the property through a settlement agreement or court order.

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

The basics of title to real property

To understand the effect of a quitclaim 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 does a quitclaim deed accomplish?

When two people hold title to property—whether as tenants in common, joint tenants, or tenants by the entireties—both must agree to sell, mortgage, or will the property.

A quitclaim deed gives one party sole ownership. 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 quitclaim 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:

• Sole responsibility. One party is awarded the property and ordered to pay the mortgage and expenses (taxes, maintenance, insurance).
• Shared responsibility. One party is awarded the property, but both parties share mortgage and expense payments.
• Non-owner pays. One party is awarded the property, while the other party pays 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, lenders rarely agree to release you since two borrowers provide more security than one. If your ex-spouse defaults, the lender can pursue both of you in a foreclosure lawsuit.

If your ex-spouse defaults, your recourse is to return to the court that granted the divorce. While the court cannot release you from the mortgage, it may order your ex-spouse to reimburse you for payments made to the lender or restructure the property division to compensate you.