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Do I need to sign a quit claim deed in order for my ex-husband to proceed with short sale? We're both on deed & mortgage.

Sterling Heights, MI |

My ex husband lives in the home. We are both on the mortgage and deed. He is asking me to sign a quit claim deed so he can proceed with a short sale. Is this okay and "safe" for me to do? Being that I'm still on the mortgage I can't help but think it's not a smart idea to waive my interest in the home however, I know I'm not going to get any money out of it. I just want to make sure this is the correct way to go about things and that my ex has accurate information and it's okay for me to sign the quit claim deed. Also, I have credit in the 900's. How much is a short sale going to effect me?

Attorney Answers 3

Posted

A quit claim deed WILL take care of this. If a short sale can be achieved, it will relieve your obligation on the debt. I cannot tell you exactly how much it will affect your credit, but it will be less of a hit than a foreclosure or bankruptcy.

What does your divorce agreement or judgment say regarding the property?

James Frederick

*** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.

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2 comments

Asker

Posted

Thank you for your response! The divorce was in 2008. He was self employed & did all he could while we were married to write off as much as possible for tax filing purposes. That being said, he didn't show making much money so him assuming the mortgage on his own wasn't possible at that time. The divorce decree stated he had a year to either sell or refinance. However, with the economy taking the turn it did I wasn't going to make him do either, nor could he since the house was and is under water. The decree states I'm not liable for anything at all and he is solely responsible for everything. He's never been late on a payment the whole time. But I want this over with & I'm willing to take a credit hit so my name can be off the mortgage. I have my own house so I assume my credit can't get too hit since I pay my own mortgage every month. I just want to make sure that signing a quit claim deed is needed for him to process the short sale as he is telling me. I'm not too concerned with giving up interest in the property & still being on the mortgage as there's not much interest so to speak anyway. The house is about $50K under water so what's there to be interested in really, ya know?

James P. Frederick

James P. Frederick

Posted

That was my initial sense from your question. But Attorney Dent is right that you should at least speak with a real estate attorney. I HAVE heard the same situation in a number of other cases like yours, but I believe that you could sign off, at any point. If your ex is trying to refinance or renegotiate the loan, then he would not be able to do that without your consent or a quit claim deed.

Posted

Do not sign the quit claim deed. If you agree to the short sale, all you have to do is to cooperate with the contract and closing. If you sign the deed, you are giving up your interest in the house but remaining liable for the mortgage. A short sale probably will affect your credit, but how much? where is your ex getting his info? (A realtor is not an attorney.)

This response is based on the limited facts presented and is not intended to substitute for direct legal advice, nor is it intended to establish an attorney-client relationship. It is intended to direct you to issues which you may desire to explore further.

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11 comments

James P. Frederick

James P. Frederick

Posted

I actually think this is a far better answer than I gave. What I *should* have said is that you should consult with an attorney before doing anything. If the property is sold, you can always sign off. Your situation is fairly common, however, and if a short sale IS possible, your credit will be hurt less than a foreclosure. IF your judgment or settlement agreement called for you to give up the property, then you will need to do so. To be on the safe side, however, you should consult with an attorney before giving up any property rights. Attorney Dent was correct to point this out.

Lisa Kaye Deselms Dent

Lisa Kaye Deselms Dent

Posted

I did not see your answer when I wrote mine. We must have been typing at the same time. The judgment should probably address the quit claim deed in relation to refinancing, don't you imagine? If there was an attorney for the divorce, that's where to start.

James P. Frederick

James P. Frederick

Posted

You are probably right. Based on the Asker's comment to me, it sounds like the judgment gave her ex a year to refinance or sell. I have had several people approach me with a similar situation recently and I do not know if this is something new with lenders and short sale arrangements, or if he is trying to renegotiate the loan and they will not speak with him while she is still on the deed. I had a lender tell one of my clients this within the past month. Her soon to be ex was willing to sign off on the property. That was what I had in mind when I saw her question. Thank you for the follow-up!

Lisa Kaye Deselms Dent

Lisa Kaye Deselms Dent

Posted

Interesting. I love it when lenders practice law. Asker, we will be interested in the outcome. Talk to your divorce attorney.

Asker

Posted

Thanks again you two. I will let you know what happens. I'm going to call the mortgage place that he wants me to go to sign the quit claim and see what they say. To me it makes sense to wait until closing. I guess anything could happen and signing my name off now when there could be a 3-6 month wait for closing doesn't seem very smart regardless if the house is under water or not. I just wanted to be sure that the quit claim didn't need to be signed in order to get the short sale process going. I don't want to prevent it from happening or be the one to put a wrench in the process. I'm more than willing to cooperate I just have to look out for my best interest. If legally the quit claim deed isn't needed for the short sale & can legally wait til closing than I plan to do that. I just wanted to know if it was mandatory I do it now to get the short sale process moving is all.

Lisa Kaye Deselms Dent

Lisa Kaye Deselms Dent

Posted

Remember, do not take legal advice from the lender. Get the info and then check it with your attorney! Good luck!

Asker

Posted

Thinking about this further - if I were to sign the quit claim and something were to happen to my ex husband... I would be solely responsible for the mortgage and his current wife would have rights to the home? Because if they're married that house would technically be half hers regardless if she's on the mortgage or deed which she isn't. Is that correct?

Lisa Kaye Deselms Dent

Lisa Kaye Deselms Dent

Posted

The house does not become hers via the marriage necessarily, but she is an heir! Good call.

Asker

Posted

Ah ha! So looks like I'll be waiting til closing to sign off on this house then for sure! Boy am I glad I came to this site! Thanks so much for your help! I'll still keep you posted.

Asker

Posted

Another question popped in my head...can the bank come after me if they don't absolve the short sale balance? I have my own house, savings accounts, 401K, perfect credit... what's to prevent the bank from coming after me since I'm on the mortgage and deed? The judgement is a bit gray as far as liability. Really only states the ex is "solely responsible for mortgage, taxes, insurance, repairs and all other obligations." We're tenants in common in the judgement as well. I'm just starting to over think all of this and can't help but be afraid that this short sale could end up being worse than I thought.

James P. Frederick

James P. Frederick

Posted

While I suppose it is *possible*, it does not appear likely, in your case. Unless the deficiency is huge, it is not going to be worth it for them. It would appear that your judgment then makes your ex responsible for that, as well. So you would then have a claim against him. I have heard of very few cases where the bank later pursued a deficiency. Attorney Dent's experience might be different.

Posted

Do not quit claim, surrender your interest only at the closing of the short sale. Otherwise you will have the debt and no interest in the property. You should.discuss the planned transaction with your own counsel.
As for you credit rating, it will take a hit, borrow or refinance now

To the PROSPECTIVE client, please call myself or another attorney for you choice with more detaiils and an appointment. My PRELIMINARY answer to your question(s) is for general purposes and based upon what little information you have conveyed. It is based on such limited information that the general answer should never be relied as a reason for your action or inaction. My response does NOT establish an attorney-client relationship and such may only be established by mutual agreement, and the signing of a written retainer agreement, which will generally require payment for our services, as this is what we do for a living and, just like you, we must get paid for our work.. .

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