After a Divorce, You May Still Be on the Hook for a Mortgage
I met a friend of mine for coffee recently and he told me he had signed a Quit Claim Deed, releasing his ownership of the house he and his now ex-wife had bought years earlier and in which she lives. He added, "I can go buy another house now, right? That's what my realtor said."
"Maybe," I replied.
He was under the impression that a California Quit Claim Deed released him from liability on the mortgage attached to his ex-wife's house in addition to releasing his ownership interest. I had to break the news to him that lenders don't necessarilly look at it that way. Disposition of joint liabilities is a different legal issue than what is covered by a Quit Claim. He was not very happy, to say the least because, like a lot of homeowners, more is owed on his former home than it is worth, which means a short-refinance or short-sale in order to remove him as a mortgagor.
So, what is the solution? Address questions about outstanding mortgage obligations with a qualified family law attorney, preferably before the divorce is finalized.
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