Understanding the Use of Quit Claim Deeds in Divorce

One of the ways to transfer the interests in a part of property between spouses during a divorce is to sign a California quit claim deed.

Who prepares a quit claim deed in a dissolution of marriage depends on the parties’ agreements. Some couples prefer to complete it independently, while others decide to involve a lawyer.

Does a quitclaim deed give you ownership? Yes, you can get a part of the property after your spouse signs the document, but whether you will become its sole owner depends on the case-specific circumstances.

Does a spouse have the right to property after signing a quit claim deed? Either party who transfers the interests in the ownership loses their right to it; instead, the other one receives it.

In this article, we will discuss in more detail how to do a quit claim deed and how spouses usually use it during the divorce process.

What Is a Quit Claim Deed in a Divorce?

There are many situations when you may need to prepare a quit claim deed: divorce, transfer of interests in ownership between relatives, change of a property’s title, etc. It differs from other documents related to property division, so you’re unlikely to use it for purchase and sale deals.

In divorce proceedings, a quit claim deed is a formal document certifying the fact that one spouse renounces their real estate interests in favor of the other spouse. The grantor is the party who transfers their part of the property, and the grantee is the one who receives it. The primary characteristic of a quit claim deed is that it does not provide any guarantees regarding the state of the property or the availability of rights. Put differently, the grantor transfers their rights to real estate by signing the document, but it does not guarantee the grantor indeed has these rights (California Property Ownership and Deed Recording).

You can prepare the document whenever you decide – before or after the dissolution of marriage. Depending on when you sign the quitclaim deed, the California divorce may have a different outcome. If you sign a quitclaim deed during marriage, it may affect the judge’s decision on the divorce terms. In addition, it may have an impact on the amount of taxes you have to cover at the end of the tax year or the duration of alimony that one spouse has to pay to the other.

Most often, parties sign a quitclaim deed after the divorce is finalized and all the marriage termination issues are determined. You can prepare the document yourself or ask a lawyer, real estate specialist, or other expert for help. It is important to fill in all the fields correctly. You can find the current form of the document on the official website of your district. For example, here is the quitclaim deed form for the County of San Luis Obispo.

Whether the fact that the ex refuses to sign a quit claim deed will have consequences depends on various factors, including the time when you are going to prepare it. If you complete the document before finalizing the divorce, the other party may be against your decision, and you will have to negotiate. If the decision to sign a quit claim deed is specified in the divorce decree, neither you nor your spouse can avoid the judge’s order. Refusing to comply, you may receive a fine or other penalty for contempt of court.

You can cancel the quit claim deed if both of you agree to it. In some situations, you can annul it if you prove that one of you signed it under duress.

In California, preparing a quit claim deed is common in divorce. Spouses can use it for one of the following reasons.

  • Transferring Property to One Spouse

Couples terminating marital relations can use a quit claim deed to exchange their rights in real estate. For example, they can agree that one of them will transfer their interests in a family home, and the other will give up their share in a summer cottage.

  • Equalizing Property Division

Parties may also prepare a quit claim deed to share ownership if they decide to divide it equally following a divorce. The grantee can become the only owner of the family home if the grantor transfers their rights to it. The recipient, in turn, may then consent to give up other property they acquired together during the marriage.

  • Removing One Spouse from Mortgage Obligation

A couple who buys a house with a mortgage and refuses to sell it after the divorce must decide who will continue to pay the debt and whose name will be on the contract title. For one spouse to become the only mortgage payer, the parties must modify the refinancing agreement and use a quit claim deed to transfer ownership interests.

  • Facilitating a Buyout

If one of the parties wants to keep the family home after the divorce and buy its part, the other party can use a quit claim deed to transfer their rights to it. Spouses can specify their arrangements in the Marital Settlement Agreement.

  • Ensuring a Clean Property Title

During a divorce, parties who have joint real estate and want to sell it may need to prepare a quit claim deed. It will serve as a guarantee that the act of purchase and sale takes place between one of the spouses and a third party; that is, the other spouse will not be able to claim their rights in this property later. It is one of the ways how to take the spouse off the house title and to assure the potential buyer of the property that no other party has interests in it.

  • Satisfying Spousal Support Obligations

During court proceedings, either spouse can agree to provide alimony for the other one after the termination of marital relations. One of the parties can pay spousal support monthly, in a lump sum, or offset their amount with a part of their interests in joint real estate. If the recipient has no objections, the payer can prepare a quit claim deed instead of paying the financial assistance in cash.

Since quit claim deeds do not provide sufficient guarantees regarding the interests of the parties who own the property, they are rarely used to conclude agreements between third parties. However, their signing may be appropriate between close relatives or future ex-spouses.

How Does a Quit Claim Deed Affect a Mortgage?

In most situations, concluding a quit claim deed during a divorce will not have any impact on the mortgage. If you sign a quitclaim deed, the mortgage terms will not change for either of you. You both will still be responsible for the debt to the creditor.

Does a quit claim deed remove me from the mortgage? No, the answer to this question will be negative. The fact you transferred your interest in the property to your spouse does not change your obligations to the lender until the mortgage agreement is modified. To remove your name from the contract’s title, you must contact the creditor to change the terms of refinancing the property. The grantee, in turn, will need to prove their ability to repay the mortgage debt on their own. Then, a new property refinancing agreement can be concluded.

What happens if you have a quit claim deed but are still on mortgage? If you sign a quit claim deed but do not change the mortgage agreement, you may be forced to pay the debt in the future. The grantee may promise to make regular payments on your behalf, but if they do not fulfill them, the creditor can require you to compensate for them. Without modifying a contract, you will remain a debtor until the mortgage is fully repaid.

How Does a Quitclaim Deed Affect Property Taxes?

As a general rule, the recipient must pay all tax obligations before receiving the property. However, when parties sign a quit claim deed, taxes for the ownership transfer may not be required.

So, does a quit claim deed affect property taxes? The answer can be both yes and no. Given that parties transfer their interests to property without paying for them, as in a sales contract, they may be liable for gift taxes. However, this tax is not required if the exchange of interests takes place between spouses who are co-owners of the property. According to Property Tax Rule 462.220, revaluation of property due to a change in ownership by spouses will also not be required.

However, couples may need to pay a documentary tax in California. Under RTC 11911, its rate may be $0.55 for every $500 of property value.

In most cases, divorcing spouses use quitclaim deeds to transfer their interest in a property to another party in exchange for other ownership or for other reasons. Signing them does not release parties from debt obligations and does not guarantee that the recipient will not get any property claims from third parties in the future. Such deeds are most appropriate in concluding agreements between relatives or future ex-spouses, but not third parties.