Removing a spouse from the title of your property after a divorce is a very popular question. After years of posting and originating about use of the owelty refinance as a way to split the equity in the house after a divorce between husband and wife, I looked back and realized that I did not actually include the simple detail that is not necessarily common sense to everyone. That is, that during a refinance of an owelty, the spouse that is NOT keeping the house, is removed from the title of the home.
There are really only 3 popular ways to remove an ex-spouse from the title of your property:
1. Quitclaim Deed– this is one way to remove a spouse from title, but upon removing the leaving spouse from title, the leaving spouse no longer has rights to the property or it’s interest, as mentioned on Wikipedia’s explanation of the Quitclaim Deed. Quick note; Quitclaim and Quickclaim is said to be synonymously used. I myself have heard them both used. One concern that many within the industry mention about this is the risk that the lender holding the note could potential call the note due if they found that this quitclaim process took place. Briefly, it is my understanding that the lender originally agreed to make the loan with both spouses on the title, and removing the spouse without their permission is “breach of contract” in sorts. Don’t quote me on that one.
Wiki’s quoted explanation of the Quitclaim Deed relating to the divorce process
“Another common use for a quitclaim deed is in divorce, whereby one spouse terminates any interest in the jointly owned marital home, thereby granting the receiving spouse full rights to the property. For example, when a wife acquires the marital home in a divorce settlement, the husband could execute a quitclaim deed eliminating his interest in the property and transferring full claim to the wife quickly and inexpensively.”
2. Refinance the property– in many cases through the years, when divorcing spouses have contacted me to study their options in how to handle the homestead property in their divorce, some decide that they may not have enough equity in the home to bother with splitting equity between them, or they have other assets that they would rather use to split interests from their marital estate. If the spouses agreed on not splitting the equity, the spouse keeping the property could simply just refinance the property, and the leaving spouse would sign an affidavit at closing agreeing to remove their name from the title.
3. Owelty Refinance (Click Owelty Refinance to link to “all you need to know about owelty refinance in divorce”)– the owelty refinance is essentially the same process as #2 above. The only difference is that the divorce decree adds the variable of splitting the equity of the home while also refinancing the property. So, if you were wondering, does the owelty refinance also accomplish your goal of removing the leaving spouse from title, the answer is yes. The leaving spouse will be removed from title upon the refinance of the owelty.
Carla J Gardiner says
Although I have no intentions of needing to use an Owelty Refinance on my home this is good to know information. Funny, I worked at a bank and in the real estate department and have never heard of this before. Is it country or state specific?
Tibor Cio says
Great Info Sir Brad Lynch, my wife always said “I’m a very good housekeeper: I always keep the house.’
TERRY says
Interesting .. hope I never need to know this information !
Vene' says
Great and very valuable information Brad…I pray I never to use it..
Dov Shapira says
Sounds good to me, I should have done it long time ago
Meli says
Can’t remember if I removed my former spouse’s name. At this point it’s irrelevant and hopefully I won’t ever need to again! It’s good information to have for others going through divorce.
kungphoo says
My wife says we are not allowed to get divorced.. but these are good things to know if this issue arises..
Brad Lynch says
If you are not allowed, you aren’t aloud. Nuff said right? 🙂
Brad Lynch says
Carla,
I’m not sure if it’s country specific, but I’m sure that there are multiple states in the U.S. that use these. On the other hand, I only do loans in Texas, so I’ve not been outside Texas with this program. It’s definitely not just our company and state though.
Irene S. says
What a sad thing to think of to have to do but it is reality. Thank you for the great info and being available for phone call if needed.
Deborah says
I did the opposite. When I got married, I added my husband to the deed for our home. I would hope that I would never have to take him off because of a divorce. We’re happy together.
Kelly says
From my experience even if they do a quitclaim that the property will still show on the spouse’s credit report.
dawn says
Great information but I hope I never need it.
Casey Gardner says
What great information. Hope I never live in this situation, but good to know.
Christine says
This is really good information to know! 🙂
Brad Lynch says
Kelly…sorry to just get back with you on this. I was on a short end of the Summer vacation. 🙂 Yep, it does not remove the borrower from the credit obligation. I almost always suggest against this option. 🙂
Brad
Samantha says
I am enjoying reading your blog. I agree with Kelly. The quitclaim deed will not remove the financial obligation. Selling or refinancing is the best option in a divorce situation.
wade says
Brad, how is an owelty lien done, how soon before a refinance and how much does it cost to do an owelty lien ? Do both parties have to agree on the information/amount of the owelty or only one person ? (this is non-marriage, non-divorce) ?
Brad Lynch says
The owelty lien is created by the title company during the refinance process. They take the verbage in the divorce decree to create it, and they make special warranty deed. The refinance costs the same as any other refinance, typically. Typical costs for a refinance are $2500-$3500 depending on the size of the loan. Regarding the two parties, that amount that the leaving spouse gets in the form of cash is negotiated between the divorce attorneys on the divorcing spouses interests. So, its spelled out in the divorce decree. Hope this helps.
Brad Lynch
YMGFL
Brad Lynch says
Samantha, I agree totally. I’m actually doing a refinance right now, to take the ex-spouse off the loan, despite the fact they already did a quit-claim deed.
Brad
Christy says
upon our divorce all the debt and the house debt remains in the hands of my x husband. he and my two boys live there. if he refinances with quikdeed and their is no mention of equity to be split in divorce decree,. what happens then.. regardless my name is to be removed..
only curious
Brad Lynch says
There is no need for such a deed transfer. As long as your decree is final and divorce complete, a normal rate and term refinance will be all that is needed to get you off title.
If you have more questions, please email me at yourmgfl@gmail.com
Abbie says
And what if the spouse who took the home doesn’t have the credit or income to refinance? We are running into that right now. The home is upside down, but she continues to make payments, so we can’t force her to short sale or foreclose. All we want is his name off the title. Suggestions? We are getting so frustrated. She had 4 years to get it done and that time has come and gone, holding our future up.
Brad Lynch says
Abbie,
I can’t remember if got back to you on this…your message looked so familiar to other similar situations I’ve posted about. 🙂 The answer to your question is, there isn’t really a good way to get off title w/out refinancing or selling. You can contact a title company and have them do a quit-claim deed to remove the spouse, but typically when the original loan was originated with both spouses on title, the “contract” for the loan is with both people. I’ve heard of people contacting their current lender to get written permission to remove the spouse from the loan. This way, if something came up, they couldn’t call the note due if they found that the other spouse was removed from the title. I hope this answers your question. Best of luck!
Brad
Tina says
Hi Brad,
I have what I think might be an unusual situation. About 8 years ago my spouse and I divorced and at the time we took his name off the loan but kept his name on title. I’m now refinancing and according to escrow he had to sign an information statement. He did this, and now escrow has came back and says we now have to have his current wife sign a interspousal transfer grant deed. Is this necessary? The property was bought and settled before they married. We did divor e in California, although my understanding is because the property was acquired before they married that he doesn’t have any claims to the property
Brad Lynch says
Tammy,
I think maybe because my business is solely in Texas, some of those terms aren’t familiar to me. Good luck on your research!
Tara Urban says
My husband was awarded the house in his divorce. We want to get a home equity loan to start our own business. What steps should we take to deal with his ex wife still being on the deed?
Silvia says
Hi brad,
I live in California and my question is as follows.
My husband and I are still married but he was deported about 7 years ago. How do I go about removing him from the tittle of the home? The loan is just under my name and both names are on the title.