THE EMOTIONAL TIES TO
THE FAMILY HOME OFTEN
RUN DEEPER THAN ITS
WALLS.
DIVORCE
ISSUE 22, OCTOBER 2024
REAL ESTATE & MORTGAGE JOURNAL
WWW.DIVORCELENDINGASSOCIATION.COM
Quit Claim Deed vs. Warranty Deed
Key differences and their impact on
divorce property settlements.
EVALUATIVE MEDIATION
The benefits of a Subject Matter Expert
DIVORCE FINANCIAL PLANNERS
how a CDLP® Complements the Work of
a Divorce Financial Planner
04
05
QUIT CLAIM VS.
WARRANTY DEED
15
HOW A CDLP® COMPLEMENTS
THE WORK OF A DIVORCE
FINANCIAL PLANNER
13
UNDERSTANDING CREDIT CARD DEBT
LIABILITY DURING DIVORCE
18
DON’T LET CONFLICT
STALL THE PROCESS
TABLE OF
PRESIDENT’S LETTER
EVALUATIVE
MEDIATION AND THE
REM-S™
09
CONTENTS
The Value of Working with a Certified Divorce Lending
Professional (CDLP®)
A CDLP® brings the financial knowledge and expertise of a solid
understanding of the connection between Divorce, Family Law,
Financial and Tax Planning, and mortgage planning strategies
related to real property and divorce.
A CDLP® is trained to recognize potential legal and tax
implications of mortgage planning in divorce situations.
A CDLP® is skilled in specific mortgage guidelines as they pertain
to divorcing homeowners.
A CDLP® can identify concerns with support structures that may
conflict with mortgage planning opportunities.
A CDLP® works directly with the professional divorce team to help
implement a strategic divorce settlement agreement, ensuring the
best opportunities to secure mortgage financing after the decree.
A CDLP® can recommend financing strategies that help
divorcing clients identify mortgage planning opportunities for
maintaining the current marital home while helping to ensure the
ability to achieve future financing for the vacating spouse.
A CDLP® does not give legal or tax advice.
Divorce Mortgage
Planning Journal
Published by:
www.DivorceLendingAssociation.com
This for informational purposes only and
not for the purpose of providing legal or tax
advice. You should contact an attorney or
tax professional to obtain legal and tax
advice.
Copyright by
Divorce Lending Association, LLC
All rights reserved. No part of this
publication may be reproduced or
transmitted in any form or by any means,
electronic or mechanical, including
photocopying, recording, or by any
information storage or retrieval system
without the written permission from the
copyright holder.
The DLA is a national organization dedicated to bridging the gap
between the legal, financial, and emotional aspects of divorce and
the real estate and mortgage process, ensuring that divorcing
individuals have the knowledge, resources, and support they need to
secure their financial well-being and make confident decisions about
their housing needs.
What is the Divorce
Lending Association?
03 DIVORCE REAL ESTATE & MORTGAGE JOURNAL
LETTER
PRESIDENT’S
Dear Colleagues,
Few aspects of divorce are more emotionally charged than decisions involving the family home. For
many families, the home is far more than just a physical structure. It represents stability, memories,
and a sense of security. The emotional ties to the family home often run much deeper than its walls,
making the decision to stay or sell one of the most difficult choices a divorcing couple faces.
As family law professionals, you know better than most that these decisions aren’t solely about
finances. The emotional weight of separating from the home can be as challenging as the divorce
itself. For your clients, the home may symbolize a sense of normalcy during a time of upheaval,
especially when children are involved. The desire to keep the home is an all-too-common struggle
even when it may not be in their best financial interest.
This is where your role becomes crucial. By helping clients navigate the emotional and practical
aspects of this decision, you play a vital part in guiding them toward outcomes that protect their
future, both emotionally and financially. Working closely with divorce, mortgage, and real estate
professionals who understand these unique challenges ensures that your clients receive
comprehensive support during this pivotal moment.
At the Divorce Lending Association, we are committed to providing the specialized training and
resources necessary for professionals like you to help your clients navigate these difficult decisions
with confidence. Together, we can make a profound difference in their lives by helping them balance
the emotional and financial realities of divorce.
Thank you for your dedication to supporting divorcing families during these challenging times.
PRESIDENT & FOUNDER
04 DIVORCE REAL ESTATE & MORTGAGE JOURNAL
What Is a Deed?
A deed is a legal document that transfers real estate ownership from one party to another. It is crucial
in property transactions because it defines the new owner and ensures the transfer is legally recorded.
There are multiple types of deeds, but we will focus on Quit Claim Deeds and Warranty Deeds.
Quit Claim Deed Explained
A Quit Claim Deed (sometimes called "quitclaim") is one of the most straightforward property transfer
forms. It allows one party to transfer their interest in a property to another party without any
warranties or guarantees about the status of the property title. In other words, the person transferring
the property (the grantor) is simply "quitting" any claim they have on the property and transferring it
to the new owner (the grantee).
A Quit Claim Deed does not provide any assurance that the title is clear or that there are no other
claims against the property. It only transfers whatever interest the grantor may have, if any, at the time
of the transfer. This means that if there are any existing liens or title issues, the grantee is receiving
them as part of the property transfer.
QUIT CLAIM DEED VS.
WARRANTY DEED
Divorce often necessitates a change in ownership of
marital property, especially the family home;
choosing the right type of deed is a critical aspect
of property settlement. Two common types of
deeds that often come up in the context of divorce
are Quit Claim Deeds and Warranty Deeds. Each
serves a different purpose and offers varying levels
of protection and assurance in property transfer.
Understanding the differences between these deeds
and their implications during a divorce can help
divorcing spouses make more informed decisions
regarding property ownership.
KEY DIFFERENCES AND THEIR IMPACT ON DIVORCE PROPERTY SETTLEMENTS
Written by Jody Bruns, President Divorce Lending Association
05 DIVORCE REAL ESTATE & MORTGAGE JOURNAL
KEY DIFFERENCES IN QUIT CLAIM AND
WARRANTY DEEDS
Quit Claim Deeds are commonly used:
Between family members or when there is an existing level of trust.
During a divorce, one spouse must transfer their interest in the
marital home to the other spouse as part of the property settlement.
Quit Claim Deed in Divorce
A Quit Claim Deed is commonly used in divorce cases because it allows
one spouse to quickly and efficiently transfer their interest in the marital
home to the other spouse, often without involving a formal sale. This is
typically done as part of the divorce settlement, where one party may
agree to relinquish their interest in the property in exchange for other
assets or considerations.
For example, if the wife is awarded the marital home in the divorce,
the husband may execute a Quit Claim Deed to transfer his ownership
interest to her. This allows the wife to become the sole owner of the
property, and the husband is effectively removed from the title.
However, it’s important to note that while a Quit Claim Deed
transfers ownership, it does not relieve the grantor of any mortgage
obligations. If both spouses' names are on the mortgage, they will
remain liable for the debt unless the mortgage is refinanced in the sole
name of the remaining owner. This is a crucial point to consider, as
failing to refinance could result in both parties being responsible for
the mortgage, even though only one owns the property.
06 DIVORCE REAL ESTATE & MORTGAGE JOURNAL
THE EMOTIONAL
TIES TO THE
FAMILY HOME
OFTEN RUN
DEEPER THAN
ITS WALLS.
But during divorce,
separating from the
home can be as
challenging as
separating from the
relationship itself.
Warranty Deed Explained
A Warranty Deed, in contrast, provides greater protection to the buyer or recipient of the property. When a
property is transferred via a Warranty Deed, the grantor makes several guarantees, including a clear and
valid title to the property, no liens or encumbrances (unless specified), and the right to transfer ownership.
In effect, the grantor warrants that the property title is free from any defects that could impact the new
owner. If there are issues with the title, the grantee may have legal recourse to recover damages from the
grantor.
Warranty Deeds are typically used in:
Traditional real estate transactions between a buyer and a seller who may not know each other well.
Situations where the buyer needs assurance about the quality of the title to secure financing.
Warranty Deed in Divorce
A Warranty Deed is less commonly used in divorce, but it might be
appropriate in some scenarios. For instance, if one spouse is "buying
out" the other spouse's share of the property, they may prefer to use a
Warranty Deed to ensure that there are no undisclosed liens or claims on
the property. This provides the buying spouse with protection against
any potential title defects.
When the property has been in dispute or there are questions regarding
the title, a Warranty Deed may offer more security to the spouse
receiving the property. However, because of the warranties involved, this
type of transfer is more complex and may require additional steps, such
as a title search or title insurance, making it less common in the context
of divorce.
Impact of Divorce on Property Ownership and Deed Selection
Quit Claim Deed vs. Warranty Deed: Key Differences
Level of Protection:
1.
A Quit Claim Deed offers no guarantees about the title; it simply
transfers whatever interest the grantor has, if any.
A Warranty Deed guarantees that the title is clear and gives the
grantee recourse if defects arise.
Use Cases:
2.
Quit Claim Deeds are often used between parties who know and
trust each other, such as during divorce, between family
members, or to clear up ownership rights.
Warranty Deeds are standard for formal real estate transactions,
where a buyer needs assurance regarding ownership rights.
Title Assurance:
3.
Quit Claim Deeds do not assure that the title is valid, free of
liens, or uncontested.
Warranty Deeds come with warranties that protect the new
owner from title disputes or defects.
07 DIVORCE REAL ESTATE & MORTGAGE JOURNAL
WHY BECOME
AN ALLIED
PROFESSIONAL?
Together, we can make
a difference. Join the
DLA today and become
part of the solutions
for divorcing
individuals facing
complex financial
decisions surrounding
real property and
mortgage planning.
Amy Valdivia
Director of
Allied Professionals
Education.
Resources.
Community.
Divorce is not a failure, but a necessary chapter in your life’s story. It’s a chance to
rediscover who you are and build a future that reflects your true self, even through the
pain and uncertainty.
POTENTIAL RISKS AND CONSIDERATIONS
When transferring property as part of a divorce settlement, it is essential to understand the potential
risks and implications of using a Quit Claim Deed or a Warranty Deed:
Title Issues: A Quit Claim Deed does not guarantee a clear title. If hidden liens or other claims
exist, the spouse receiving the property could be in for an unpleasant surprise. Consulting a title
professional or attorney before signing a Quit Claim Deed can help mitigate this risk.
Mortgage Liability: Transferring property ownership via a Quit Claim or Warranty Deed does
not affect the mortgage. Both parties should work with their lender to determine the best course
of action, which often involves refinancing the property into the spouse's name and retaining
ownership.
Legal Assistance: Divorce-related property transfers can have significant financial and legal
consequences. It is highly recommended that both parties work with experienced professionals,
including real estate attorneys and Certified Divorce Lending Professionals (CDLPs), to ensure
that the property transfer is handled correctly and that all potential risks are addressed.
Divorce is a complex process, particularly when real estate is involved. The difference between a Quit
Claim Deed and a Warranty Deed plays a crucial role in determining the level of protection for the
parties involved. Quit Claim Deeds are most commonly used in divorce settlements due to their
simplicity and efficiency in transferring ownership between former spouses. However, they come with
potential risks, including unclear title issues and ongoing mortgage liability.
On the other hand, Warranty Deeds offer greater protection to the recipient but are less frequently
used in divorce situations because of the warranties involved and the additional steps required. When
deciding between these two types of deeds, it’s vital to consider the circumstances, consult
professionals, and understand the implications fully.
How Are You Integrating Divorce Mortgage Planning Into Your Case Management?
08 DIVORCE REAL ESTATE & MORTGAGE JOURNAL
Involving a Certified Divorce Lending Professional
(CDLP®) in the negotiation process opens the door to
strategic solutions. A CDLP® can provide clarity and
suggested language in the settlement agreement to
avoid hiccups with the mortgage loan process when an
equity buy-out or new purchase loan is required.
expertise, offering opinions and assessments. This approach can be particularly helpful in divorce cases
involving complex financial issues like property division and mortgage financing.
In evaluative mediation, the subject-matter expert may:
Analyze financial documents and assess the value of assets.
Provide insights and potential outcomes based on experience and expertise.
Offer recommendations for possible solutions, considering the best interests of both parties and any
children involved.
The Role of the Evaluative Mediator and REM-S™
An evaluative mediator and REM-S™ can play a crucial role in the property division process. They possess
in-depth knowledge of the real estate and financial implications of divorce and can provide valuable
guidance on issues such as:
Affordability: Determining whether a spouse can afford to keep the marital home based on their income,
expenses, and credit profile.
Refinancing Options: Exploring various options to buy out a spouse's equity or modify loan terms.
Market Analysis: Evaluating the current market value of the marital home to aid in equitable division.
Tax Implications: Analyzing the tax consequences of different property division scenarios.
Credit Considerations: Helping parties understand the impact of divorce on their credit scores and
strategies for rebuilding credit.
How A Real Estate Mediation Specialist (REM-S™) Enhances Evaluative Mediation
A Real Estate Mediation Specialist can collaborate with the parties involved to assess the financial and real
estate landscape comprehensively. This allows the parties to make informed decisions based on accurate and
ENHANCING DIVORCE RESOLUTIONS WITH
EVALUATIVE MEDIATION
09 DIVORCE REAL ESTATE & MORTGAGE JOURNAL
Divorce is often a complex and emotionally charged process,
especially when it comes to dividing assets like the marital
home. Evaluative mediation, combined with the expertise of
a divorce mortgage planner or a divorce real estate
professional, can provide a valuable pathway to navigate
these challenges and reach equitable solutions.
What is Evaluative Mediation?
Unlike facilitative mediation, where the mediator focuses on
facilitating communication and guiding the parties toward their
own resolution, evaluative mediation involves subject-matter
realistic property and financial information. These experts can also help explore creative solutions for
property division and mortgage financing, increasing the chances of reaching a mutually agreeable outcome.
Scenario: Sarah and Mark's Divorce
Sarah and Mark are divorcing after ten years of marriage. They own a marital home with a remaining
mortgage balance of $250,000 and an estimated market value of $400,000. Sarah wants to keep the house for
the sake of their two children, but she is unsure about her ability to afford the mortgage payments on her
sole income. Mark, on the other hand, wants to sell the house and divide the proceeds equally.
Evaluative Mediation Process:
Mediator and Professional Introduction: The parties, their attorneys, the mediator, and the Real Estate
Mediation Specialist (REM-S™) meet for an initial session. The mediator explains the evaluative
mediation process and highlights the role of the financial or real estate expert.
1.
Information Gathering: The REM-S™ gathers relevant property and financial documents from both
parties, including income statements, tax returns, bank statements, property and mortgage details. They
also obtain an appraisal or Comparative Market Analysis (CMA) of the marital home or other real
property.
2.
Financial and Market Analysis: The expert analyzes the financial information and prepares a detailed
report on the marital home, which may include:
3.
Sarah's current income, expenses, and ability to qualify for a new mortgage in her name alone.
The potential net proceeds from selling the house after accounting for the mortgage payoff, realtor
fees, and closing costs.
Potential tax implications for both parties under different scenarios.
Mediator's Evaluation: The mediator reviews the expert's report and provides an evaluation based on
relevant case law and statutes. They discuss the potential outcomes of different scenarios, considering
factors such as child custody arrangements, spousal support, and equitable distribution of assets.
4.
Joint Session Discussion: The mediator and REM-S™ present their findings and evaluations to both
parties in a joint session. They discuss the pros and cons of each option:
5.
Sarah keeping the house: The REM-S™ explains the financial requirements for Sarah to refinance
the mortgage and outlines potential challenges she may face. The mediator discusses potential
spousal support arrangements to ensure fairness.
Selling the house: The REM-S™ details the estimated net proceeds from the sale and how they
would be divided. The mediator discusses the potential impacts on child custody arrangements if
Sarah needs to relocate.
Other options: The mediator and the REM-S™ may also explore creative options such as a delayed
sale or renting out the property.
Negotiation and Agreement: Based on the information and evaluations provided, the parties engage in
negotiation facilitated by the mediator. The divorce mortgage planner or divorce real estate professional
can answer questions, provide additional financial analysis, and help the parties understand the financial
6.
EVALUATIVE MEDIATION SCENARIO
10 DIVORCE REAL ESTATE & MORTGAGE JOURNAL