When your marriage takes an unexpected turn, your divorce may involve selling the home you owned together as a former couple. While you might be ready to (literally) close that door and move forward, it’s important to identify potential ownership issues that could delay your closing and cause complications during an already difficult and emotional time.
Let’s explore four common divorce-related title issues that should be addressed before putting your home on the market.
Both Former Spouses May Still Be on the Deed
While many people assume that real estate ownership changes automatically after a divorce, that’s typically not the case. In fact, one of the most common surprises after parting ways is discovering that both former spouses are still listed on the property’s deed.
A Judgment of Divorce (or divorce decree) may outline who should receive the home, but it doesn’t automatically update the county’s land records. Without an appropriate deed that’s prepared, signed, and recorded, the public record may continue to show both former spouses as legal owners.
When the divorce settlement requires one spouse to transfer their ownership interest, the deed must usually be updated separately. In Michigan and Florida, this often involves recording a quit claim deed — a form of deed used to convey real estate from one party to another — after the divorce is finalized.
The title company will verify who legally owns the property before it can be sold, performing a title search early in the process to identify any discrepancies and avoid last-minute delays.
The Divorce Judgment May Not Be Valid
Because certain requirements must be met before the title to a property can be changed between divorced spouses, the title company will review the final divorce decree to ensure that it’s valid and contains all the necessary language.
The decree must have been ordered by the judge at least 30 days prior to closing a sale or refinance so that neither spouse may file an appeal. If the decree is incomplete, a warranty deed may be required, which can cause delays. For a divorce decree to officially transfer title between spouses, it must include language that specifically grants the property to one spouse and divests the other spouse of any and all interest in the property.
In addition, the decree must contain the actual legal description of the property, not just the physical address. This is because real property records are
indexed under the legal description. A decree lacking the legal description recorded with the county is not sufficient to give notice of the title transfer.
Working with an attorney and/or the title company as early as possible can help identify concerns with your divorce decree and allow time to gather documents, obtain signatures, satisfy liens, or seek court assistance if needed.
Refinancing May Not Effect Ownership Changes
In the case of one spouse keeping the home and buying out the other’s legal interest, it’s common to refinance after a divorce to remove an ex-spouse from
the mortgage. This allows the remaining homeowner to take over the mortgage payments on their own. However, refinancing the mortgage and transferring ownership of the property are two separate legal steps.
Removing someone’s name from the mortgage does not automatically remove that person’s ownership interest in the property. Similarly, signing a deed does not automatically remove someone from the mortgage loan. To fully separate ownership and loan obligations, both a refinance and a properly recorded deed may be necessary.
If a former spouse signed the paperwork to come off the mortgage but never signed or recorded a deed transferring their ownership interest, they may still appear as a legal owner in the county’s property records. Or, they may have signed a deed giving up ownership but remain responsible for the mortgage if the loan was never refinanced.
Again, having the title company review the title early in the process allows time to resolve any ownership issues before they affect the closing timeline.
Both Former Spouses May Need to Sign at Closing
One of the most common questions sellers ask after a divorce is, “Will my ex-spouse have to come to closing?” The answer depends on who legally owns the property at the time of the sale, not necessarily who has been living in the home or making the mortgage payments.
When only one spouse is listed on the deed, that person can generally sign the seller’s closing documents without the other spouse. However, if both former spouses still appear as legal owners, they both need to sign documents required to transfer clear title to the buyer. Both spouses must also sign at closing if the home will be sold while the divorce is still pending. This is not the case if the divorce is final beforehand (30 days after the final decree is ordered).
Keep in mind: Signing doesn’t always happen at the closing table. For example, if a former spouse’s signature is required, Vanguard Title can often coordinate signing in advance or arrange for documents to be signed remotely through our convenient Close Anytime Anywhere experience.
In some situations, a properly recorded deed or other legal documentation completed before the sale may eliminate the need for a former spouse to sign altogether. Every situation is different, which makes the title search so critical in identifying the current owners and determining whose signatures are required.
Vanguard Title Can Help Make the Selling Process Smoother
When selling your home is part of the final chapter after a divorce, it’s worth making sure your property’s title is also ready to move forward. Fortunately, Vanguard can identify and help resolve most title issues prior to closing. Even before the “For Sale” sign goes up, our team of dedicated professionals can work with you, your real estate agent, and, when necessary, your attorney to help ensure a clear title and your peace of mind.
