One of the most common questions in Texas divorce cases is, “How do I get my name off the mortgage when the other party gets real estate in the final decree?”
The answer comes down to executing a quitclaim deed in divorce proceedings, but there are many additional, complex issues involved. You can count on an Austin divorce lawyer to assist with the details, but you may find some background information to be useful.
Overview of Ownership to Real Property
To better understand a quit claim deed in Texas divorce, it’s important to first understand the types of ownership that apply to real estate. When spouses purchase property together, it’s likely that the asset is held according to one of the following forms:
- Joint Tenancy: You each have an equal, undivided ownership interest in the property. Both spouses also have survivorship rights, which means that when one dies, the other takes ownership of the entire asset.
- Tenancy by the Entirety: Texas doesn’t recognize this form of ownership, but you may see the term if you own property in other states. Essentially, it’s the same as joint tenancy – except that it only applies to married couples.
- Tenancy in Common: This form of ownership is rare between spouses, who usually purchase as joint tenants. There is no right of survivorship with tenancy in common, so your interest doesn’t automatically go to your spouse upon death. It goes to your heirs, such as children, parents, and siblings.
The Role of Quit Claim Deeds in Divorce
A central issue in Texas divorce cases is property division, i.e., granting marital assets to each party. In a community property state like Texas, all property acquired during the marriage is subject to fair, equitable distribution in divorce. It may not necessarily mean a 50-50, but the court will consider the interests of fairness when issuing an order on property division.
When it comes to an asset like real estate, the judge – or the parties by agreement – may take one of two approaches to property division:
- Order the asset to be sold to a third party, and the parties split the proceeds; or,
- Award the property to one of the two divorcing spouses.
A quit claim is a tool used to accomplish the details of property division option #2, so that the proper party will be the sole owner of the real estate. It’s a mechanism for taking one party’s name off the title to the property and allowing the other to remain. Without a quit claim deed after divorce, both parties would still be considered joint owners. As such:
- It would be necessary for both ex-spouses to sell the property in the future;
- Each person could encumber the real estate, such as through a second mortgage or home equity loan; and,
- When the spouse who receives the asset through property division dies, his or her interest passes to the survivor – even if they divorced several years prior.
Quit Claim Deeds and Mortgage in Divorce
The most complicated issues involved with a quitclaim deed is how it works in connection with a mortgage. Once the divorce is final, each party must transfer property to the other according to the court’s order.
There is no automatic transfer of ownership simply because the divorce is complete; it’s essential to complete the proper paperwork. For purposes of the transfer, it’s critical to understand that you may be dealing with two separate issues:
- Ownership of the real estate; and,
- The debt on that real estate, represented by a mortgage.
In other words, even when you make the arrangements for a quitclaim deed in divorce, the mortgage is not effected without taking proper action. To a lender, both parties remain obligated to make monthly payments until they satisfy the debt – or until one person is no longer on the mortgage.
A quitclaim deed alone will not remove an ex-spouse’s name, so it may be necessary to negotiate with the mortgage company. One common option is to refinance the mortgage through the same lender under the same terms and conditions, but minus the name of the party who’s no longer an owner.
Discuss Divorce Quit Claim Deeds with a Skilled Austin Divorce Attorney
As you can see, issues involving a quitclaim deed in divorce can be complicated. If you don’t strictly comply with the law, the final results of property division could be completely contrary to what you – and your ex-spouse – intended. Instead of putting your rights at risk, get legal help from our experienced team at the Law Office of Ben Carrasco, PLLC.
To set up a consultation with a lawyer, please contact our Austin office today at (512) 489-9820 or check us out online. We can explain more about quitclaim deeds under Texas divorce law and assist you with navigating the process.