This is an issue that has forced cases to trial on a regular basis, and for good reason. If you do not fight the issue, and cave to the argument that since you signed a quit claim deed, the property is separate, you may lose out of any and all equity in the home. At the time this article is being written, the waiver of your equity in the home may be tens of thousands, if not over one hundred thousand, dollars. So, you can see how it makes sense to hire an attorney if this issue raises its ugly head during the divorce process. You could be missing out on quite a bit that you may be entitled to.
Now, it is all going to boil down to what the parties intended in the signing of the quit claim deed. There are several scenarios that commonly come up which include:
- One of the individuals owned the home prior to the marriage, and they refinance during the marriage. In this situation, the bank typically requires a quit claim deed for financing purposes.
- Neither party owns a house, but they buy one during the marriage and one of the parties’ credit is terrible so the bank will only finance the property if the other signs a quit claim deed for financing purposes.
- During the negotiation of the divorce process, one of the parties agrees to give the other the house and signs a quit claim deed prior to the refinance with the agreement that he or she will be getting his or her equity during that process.
- During the negotiation of the divorce, one of the parties agrees to give the other the house, including the equity, in exchange for other property or for the party receiving the house to take on additional debt.
In each of the scenarios above, the court is going to carefully analyze what the parties actually intended when the one of them signed the quit claim. What they are going to be looking at is did the person signing the document actually intend to give up any and all right to the property when they signed the deed. If so, any gain equity would go to the receiving party. That being said, you would still not be totally out if the court went in that direction.
There are ways to receive something for helping pay the expenses of the house during the marriage. You have several arguments here. First, you can request that you be reimbursed for on-half of the principal paydown of the house during the marriage. To be clear, it is just the principal paydown. You are not entitled to 50% of the total amount of mortgage payments made; just what the principal amount of the loan that decreased during the marriage.
Second, you can request reimbursement or payment for an increase in the market value if the “community efforts” has increased the value of the home. An example of this would be both you and your ex did a number of weekend projects on the house like painting, landscaping, DIY home improvements, etc. If those projects increased the fair market value of the property, you can request ½ of that increased price. If you want to pursue that increased value reimbursement, it is imperative to have an expert qualified to give an opinion on what the increased value is and be able to defend his or her opinion on that price.
The moral of the story is if you are signing a quit claim deed, and the document doesn’t expressly state the intent of the signing of the document, you should have, at a minimum, an email or text clarifying what the purpose of the document is close to the time of the signing of the document.
We handle divorce and property issues during the divorce all the time. If you don’t want to lose out on what you are entitled to, contact us today for a consultation to see how we can help.