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    redstarlette6's Avatar
    redstarlette6 Posts: 1, Reputation: 1
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    #1

    Mar 15, 2007, 09:00 AM
    Quit Claim Deed, Releases Financial Liability?
    Hi, My ex and I own property together in another state. We bought the property, built a house and intended to sell it for more than the land and construction cost. After divorcing he wants to keep the house and I just want out. He intends to buy me out for a small amount, considering that there is much debt on the house. He sent me a quit claim deed to sign and said that it takes my name off the title. This is all well and fine but I don't want to be held accountable for any financial stuff. The quit claim deed does nothing to relinquish financial liability does it? I don't want to sign something to be bitten in the behind later. Also, what does being bought out for a small amount do to my taxes for next year?
    ballengerb1's Avatar
    ballengerb1 Posts: 27,378, Reputation: 2280
    Home Repair & Remodeling Expert
    		  
    #2

    Mar 15, 2007, 09:08 AM
    You are correct about the quit claim not releasing you from other debts. If your name is on the mortgage it will still be thgere after the deed change. You are clearly thinking ahead because you would still be partially responsible for at least a partial years property tax if you are still on the deed and mortgage. Ask him to first remove you from the mortgage, this will require paperwork with the mortgage holder and you might be wise to have an attorney handle this for you, its like a closing and just as important.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #3

    Mar 15, 2007, 09:27 AM
    You are correct the quit claim deed only gives ownership of the property to him. He will need to get a new loan and pay off the old loan to take you off the mortgage.

    The mortgage company will hold you liable for the debt until the mortgage is paid off.
    Dr D's Avatar
    Dr D Posts: 698, Reputation: 127
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    #4

    Mar 15, 2007, 11:25 AM
    As the two previous posts have pointed out, you will still have a legal liability on the mortgage. Many people get divorced with the family residence and mortgage debt assigned to one party. Many mortgages have no provision for a release of liability of one of the co-mortgagors, and in many cases spouse who was awarded the home cannot or chooses not to refinance the mortgage. The following is how FNMA (the 800 lb gorilla) views "Contingent Liability". Sec 402.02B: "Property settlement "buy-out". When a borrower interest in a property is "bought-out" by another c0-owner of the property (as often happens in a divorce settlement), but the lender does not release the borrower from liability under the mortgage, the borrower has a contingent liability. We will not require that this contingent liability be considered as a part of the borrower's recurring monthly debt obligations--as long as the lender obtains documentation to confirm the transfer of title to the property."
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