Do You Still Owe Debt When You Quitclaim a Property?

Filing a quitclaim deed removes your name from the title to a piece of real estate and transfers your interest to a spouse, child, partner or other person whose name remains on the title. Quitclaiming is commonly used to transfer property during a divorce settlement, removing one spouse from the deed and putting the title solely in the name of the person who is retaining the family home. If you choose to quitclaim a property, you lose all rights to the property but aren't released from any related financial obligations.

TL;DR (Too Long; Didn't Read)

A quitclaim deed only removes you from the deed. You are still responsible for any debts associated with the property.

Quitclaim Basics

A quitclaim deed is a legal document that releases a person’s interest in a particular piece of property, and it becomes effective as soon as you sign it. Once you sign a quitclaim, you no longer have the right to use the property and won't receive any of the proceeds if the property is sold. A quitclaim deed will identify the specific property involved and will detail who is surrendering ownership and who is receiving it.

In some instances, the court can force you to file a quitclaim. If, for example, the judge grants your spouse the house in your divorce, the court can require you to surrender your ownership by signing a quitclaim deed. If the court orders you to do so and you refuse, the court can find you in contempt and jail you until you agree to sign the quitclaim. If you still refuse, the court may issue a judgment that acts in lieu of a signed quitclaim deed.

Mortgage Obligations

You can surrender your rights to a property, but you can't erase your obligations to it. Signing a quitclaim deed does not remove your financial obligation to pay an existing mortgage. Even after you surrender ownership, your original contract for the mortgage and certain other debts remain in force. The bank retains all of the lender’s original rights, including the right to pursue you for the debt and the right to foreclose on the property if you don’t make the payments, whether or not your name is on the deed.

Tax Obligations

In most states, you have a responsibility to pay any taxes on the property that are due at the time you sign the quitclaim deed. A title cannot transfer while there is a lien. If there are outstanding property taxes or a tax lien on the property, you or your co-owner must pay them before filing the quitclaim. Failure to do so can prevent the property transfer. If the transfer does go through, the new owner would become responsible for the lien, since the lien follows the property rather than people.

Protecting Yourself

Because it surrenders an asset without removing any liability, you may be leery of filing a quitclaim deed. There are, however, ways to protect yourself. Whenever possible, work with the property's co-owner to sort out the financial aspects of the property at the same time you sign the quitclaim. In the case of a mortgage, this is commonly done at closing. If your name is on the mortgage, ask the co-owner to refinance the property in their name alone. When they do, agree to attend their mortgage closing and sign the quitclaim deed there. This clarifies the financial situation and shifts all debt to the remaining owner, protecting you from paying for a house you no longer own.

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