Quitclaim Deeds and Refinancing

Quitclaim Deeds and Refinancing – What is a Quitclaim Deed?

Quitclaim Deed Definition: A quitclaim deed is a document most commonly associated with the dissolution of a joint mortgage. Particularly with residential mortgages, the most frequent use of the quitclaim deed happens during the divorce process. As part of resolving the property portion of a divorce, generally one party or the other will be awarded the house and the equity in it, as one party usually wants to retain the residence. The other party signs the quitclaim deed to relinquish interest in the property. There are some important things to consider before you sign that paperwork, though.

First, when you put your signature on a quitclaim deed, you surrender any and all rights that you might have in that property. If you and your wife own property together, you currently have equal rights to it. If you sold the house, you would be entitled to 50 percent of the proceeds, and you would have the right to refuse to the sale. However, once you sign that quitclaim deed, you are giving her complete control over that property. If she sells the house, you do not get any of the proceeds and have no rights to it.

Second, a quitclaim deed is just about the only type of deed instrument that does not come with an implied warranty that your property claim is valid. Just because you sign one does not automatically mean that you had rights to the property to begin with. The most common cases in which this question arises occurs when title companies research a property and find other existing quitclaim deeds on file.

Third, and most importantly, when you sign a quitclaim deed, that does not mean that you automatically come off the mortgage. If you and your wife have a joint mortgage, but you sign a quitclaim deed at the point of divorce, you are still on the hook for that mortgage. Your soon-to-be ex also has to sign paperwork to get your name off the mortgage. If your ex-spouse is unwilling to get that paperwork turned in, you can use your paperwork to instigate refinancing proceedings, but that is a complex process. The combination of the quitclaim deed and the refinancing process guarantees that your name comes off the mortgage. Your credit report will no longer contain this loan, and it will no longer affect your debt to income ratio.

Finally, if you acquire a house from someone else through a quitclaim deed, you accept the property “as is.” In the case of a dissolution of a joint mortgage, that is self-explanatory. However, quitclaim deeds can also be used to transfer property from party to another to settle a debt, even though the second party was not initially on the deed. If you get property this way, there is no implication of warranty. This means that you need to order a thorough inspection of the home before accepting a quitclaim deed as a resolution.

If you are considering acquiring property through a quitclaim deed or relinquishing your own claim to property in a similar way, get in touch with one of the mortgage experts at Amansad Financial. We have walked hundreds of clients through the process to ensure that they receive all of their rights and entitlements before execution of the deed.

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