Dividing assets and liabilities in a divorce can be an excruciating process, especially when it comes to the family home. Unlike bank accounts and retirement plans, you can’t just divide a house down the middle. The issue can be even more challenging when there’s a significant amount of equity in the property that needs to be divided.
Regardless of what the final decision is, somebody is going to have to transfer their interest in the house. In the most common scenario, the departing spouse will transfer their interest in the property to their former spouse. When that’s not possible, the judge may order the house be placed on the market for sale and the proceeds distributed equally between both parties (and any creditors with a lien on the property).
As anyone who has gone through the process of buying or selling a home can attest, selling a house can be a long and costly process. Unfortunately, time and money aren’t a luxury in a divorce case where lawyers charge by the hour and the average case already takes almost 11 months. In such cases, using a quitclaim deed to quickly and easily transfer ownership of a property may be an ideal solution.
What is a Quitclaim Deed?
A quitclaim deed is the fastest and most affordable way to transfer ownership of property from a seller to a buyer. It conveys an owner’s interest in a property to a buyer without offering any guarantees or warranties about the status of the property. That may not sound like an ideal situation for the buyer, but it’s great when the buyer and seller know one another, are familiar with the property, and both parties want a quick transaction.
Historically, quitclaim deeds were popular during the westward expansion and goldrush eras when pioneers and prospectors needed to stake their claim on a piece of land quickly. Today, they’re almost exclusively used in conjunction with litigation when time and cost are of essence. Even then, it’s common practice to follow up a quitclaim deed with a warranty deed after the sale is complete to iron out the details in the title.
How To Use a Quitclaim Deed in an Arizona Divorce
In divorce cases, a quitclaim deed is a great alternative to placing a property on the market for sale. It’s often used when one spouse is willing (or compelled by court order) to transfer their share of ownership in a property to the other party. Quitclaim deeds can be used to rush a quick sale when both parties need to sell to a third-party buyer, though the practice is less common since most third-party buyers prefer a warranty deed.
As an example, let’s say a husband agrees to transfer his share of ownership in the family home to his wife. In exchange for giving his wife his share of the $100,000 in equity in the house (his share under Arizona community property law would be 50%), he would get to keep $50,000 in joint liquid assets that would otherwise go to her. No money will be physically changing hands for the transaction, so a traditional sale wouldn’t be practical. A quitclaim deed would be an ideal solution here, as the husband can simply sign over his ownership interest in the house to his wife and remove his name from the title.
In cases where a quitclaim deed is feasible, it’s common practice for the spouse who is selling their interest to sign the quitclaim deed during the divorce proceedings. The quitclaim deed won’t be exercised until after the divorce is final and the judge issues a divorce decree, but signing the deed ahead of time signals a spouse’s intentions to sell.
Quitclaim deeds are a convenient solution, but they’re not always on the table in a divorce case. In the end, it’s up to the judge or mediator assigned to the case to sign off on a quitclaim deed. Should the judge decide that the only equitable solution is to sell the property and split the profits between the spouses, the judge can order that the house be placed on the market for sale. If one or both parties decide to proceed with the quitclaim deed anyways, a judge has full authority to invalidate a quitclaim deed.
Can you use a quitclaim deed with a home mortgage?
Executing a quitclaim deed effectively removes your name from a property’s title, but it doesn’t remove you from a mortgage note. The only ways to eliminate a party from the responsibility of paying monthly mortgage payments are to sell the property or refinance. If the spouse who wants to keep the property has sufficient income and credit to refinance the mortgage, refinancing is the better option. If the bank denies the refinancing application you may be forced to sell the home, in which case a quitclaim deed may not be feasible.
There isn’t a divorce attorney in the country who would advise remaining on a home mortgage note after executing a quitclaim deed, but the issue occasionally arises in self-service divorce cases. It’s possible to include language in the divorce agreement or divorce decree that instructs a spouse to refinance the home as soon as possible, though it’s generally inadvisable. If you can’t refinance the property in question, consult with an attorney to determine if selling the home is the best option.
Selling Property in Arizona with a Special Commissioner
When Arizona divorce cases require the sale of real estate, the court can appoint a Special Commissioner to market and sell the real estate. A Special Commissioner is a neutral third-party real estate agent authorized to act on behalf of the court and associated parties.
With a court order in hand, a Special Commissioner will be directed to place the property for sale in a commercially reasonable manner for market value. All parties are bound to the court order and required to cooperate with the Special Commissioner in good faith to market and sell the property. Should either party refuse to cooperate, the Special Commissioner can petition the court to compel a party to perform their duty. The court can also impose sanctions against uncooperative parties.
Receive Help With Your Quitclaim Deed in Arizona
A quitclaim deed may just be the best solution for you and your spouse to split up your property in a divorce. However, the best way to know if this solution is right for your situation is to speak with an experienced Arizona family law attorney. A good family law attorney should be able to help you determine what is best for you and your family.
To get in touch with JacksonWhite’s family law team you can give us a call at (480) 467-4348. If you have any questions or would prefer to contact us online, please fill out a contact form online.
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To ensure the best outcome of your military divorce in Arizona, it’s best to work with a divorce attorney who has experience representing service members, veterans, and their spouses in military divorce cases. At JacksonWhite, we offer our services to both current and retired military members, and have over 40 years of experience helping Arizonans with their family law needs.
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