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In divorce, if you own a house, it’s important to know all about the asset you own that you now may need to divide.
The family home is typically a couple’s most valuable joint asset and must often be sold in order to equally distribute value between the two spouses. Therefore, it is vital for you to understand the relationship and difference between a mortgage deed and a property title.
Mortgages are conditional legal agreements made for the purpose of buying a property/home. The lender’s security interest is on record when the title is registered. The mortgagee (lender) may obtain a foreclosure order to take possession if payments of the debt are in default.
A property title refers to ownership of that property and the right to use it. A person on the title can transfer ownership to another party but cannot transfer more than he or she owns.
Some divorcing couples utilize a quitclaim deed, which transfers ownership from one spouse to another, but it does not transfer financial responsibility. One spouse may transfer title of the home to the other and consider himself or herself free from the financial responsibility of the mortgage payment, but this is not the case. The loan payments are the responsibility of the parties on the mortgage. In order to change the names on the mortgage, one spouse must obtain financing with which to buy out the other.
All discussions regarding mortgages, quitclaim deeds, and title of property should be conducted with your financial and legal advisors.
**Always consult your legal adviser for contingencies that are specific to your situation.
