Addressing property division matters can be one of the most challenging aspects of a divorce. Spouses often disagree about how to value or split their property. Some people try to manipulate the process for personal gain. Those who suspect that their spouses may try to deny them their fair share of the marital estate are often on high alert during and immediately after a divorce.
The property division process doesn’t end with court-approved property division orders. The spouses still need to transfer assets and address debts to fulfill the terms imposed in a property division order. In scenarios where one spouse stays in the marital home, numerous practical steps are necessary to facilitate that transition. Executing a deed and refinancing the mortgage are both necessary steps.
The spouse who leaves the marital home has to sign a deed giving up their interest in the property, while the spouse staying in the home often has to refinance to remove the other spouse from the mortgage note. Which part of the process should occur first?
Vesting must be correct to refinance
The process of giving up one’s interest in real property can be quite intimidating. The spouse agreeing to leave the marital home likely feels anxious at the prospect of losing their interest in the property without securing the compensation that they deserve first.
Sometimes, spouses dig in their heels and insist that they cannot sign a quitclaim deed to take their name off of title until they receive financial compensation or proof that they are no longer on the mortgage note. Unfortunately, refinancing is usually impossible until the vesting or title records accurately reflect the current ownership of the home.
The spouse moving out of the marital home usually has to sign a quitclaim deed before the spouse staying in the home can refinance to take their name off of the mortgage. The refinancing has to go through successfully before the spouse retaining the home can withdraw equity to compensate the other spouse.
Signing a deed to give up ownership rights before receiving equity or getting removed from the mortgage can make people anxious. However, there is a clear paper trail establishing what should happen and proving the prior interest that the spouse held in the property. They have protection in a scenario where the other spouse fails to complete the process in a timely fashion.
Discussing the right steps to take can help those who feel anxious about the division of real property in a divorce. Those who learn more about what the process entails may feel more confident as they prepare to sign deeds and take other steps to finalize asset distribution.