Divorce Agreements: What You Need to Know About Changing the Title to Your Home Without Paying off The Mortgage
Divorce agreements often allow one spouse to purchase the other’s interest in their former marital home. This concept is called a "buy out" and usually involves one party buying the other person's interest for one-half of whatever the equity in the former marital home is determined to be. During the buy-out, the purchasing spouse takes out a mortgage for the sum that is due to the spouse selling the property. However, a buy-out can also be executed through an exchange, or waiver, of assets that are due to the selling party by the purchasing party.
Divorced parties will often agree to deed the home over to the purchasing spouse before the purchasing spouse has paid off the mortgage for the former marital home. This decision can become dangerous when the spouse who is being bought out remains on the mortgage associated with the former marital home.
For example, let’s say your spouse purchases your interest in the home and makes good on that deal but then doesn't, or is unable to, pay the mortgage. To make matters worse, you’ve already “quitclaimed” your share of the former marital home. In this case you might be able to have your “buy out” money or assets that were used to reach your agreement. However, you will still be at the mercy of your spouse when it comes to your credit standing.
When your name is not removed from the mortgage of your former marital home, the bank still has you listed as a person who is liable for the payment of that obligation. This means it is possible for your former marital home to be foreclosed upon if your spouse doesn’t pay the mortgage. You will also be subjected to the foreclosure proceedings as well.
In order to save yourself from this fate, it is important for you to make sure that the mortgage associated with your home is either paid off or refinanced into your former spouse's name, before you transfer over the property to them. Doing this will protect your credit from being damaged if your ex-spouse's fails to pay the mortgage. It can also save you the burden of having to go through a foreclosure proceeding.
At The Law Offices of A. Sheralynn Dow, we are committed to helping families resolve their disputes and move on with their lives. We offer professional and efficient legal services to all of our clients and take pride in the results our firm produces. Let us put our skills and resources to work for you today.
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