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.