Breaking up ain’t easy. But it makes it a lot harder when you share property together. Real estate and divorce require working with someone who knows what to look out for. We want to give you the low-down on getting that soon-to-be-ex off your property title.
One of our favorite title attorneys in the city, Ashleigh Tuozzolo with Delta Title, helped us out with all your pertinent info for the split.
There are 3 ways to remove your spouse/significant other from the title:
- Community Property Settlement/Partition (act wherein the community assets and debts are divvied up between the spouses as equitably as possible)
#3 is the most common.
If the parties can reach an agreement on their own then they can execute an “extrajudicial” Community Property Settlement (a written agreement of the parties that is not made a judgment of the Court).
If they’re unable to reach an agreement on their own then the judge will divide the assets and debts between them and render a judgment (this is referred to as a “judicial” Community Property Settlement).
There are a few aspects of these settlements that often cause title problems. They are as followed:
- Some of these settlements are structured as an actual conveyance of the property and some are structured as an agreement to convey the property in the future. So they really have to be read carefully to determine whether the settlement itself is sufficient to convey the title OR if a subsequent Donation will be necessary. Every once in a while we’ll get a file in and the divorced owner will think they own the property outright because a settlement has been executed. But then we read it and the settlement actually states that the ex agrees to convey the property to his/her spouse in the future. Then we need to have the ex come in to sign a Donation…and obviously, that can be tricky.
- If the spouse acquiring the property also assumes some debts other than the mortgage on the said property (e.g. credit card debts, open accounts, mortgages on other properties) AND the Community Property Settlement/Partition is recorded in the conveyance or mortgage records then it essentially becomes a Vendor’s Lien on the property. The title company will then need to get a release of said Vendor’s Lien signed by the ex prior to closing. Obviously, that can prove challenging depending on how amicable the divorce was.
- Similarly, if the Settlement/Partition states that the acquiring spouse will give a sum of money to the other spouse in exchange for the property and the Settlement/Partition is recorded in the Conveyance or Mortgage records a release will have to be signed by the ex prior to closing.
- Sometimes a Community Property Settlement/Partition will contain language that waives any rights to the vendor’s liens on the property and in that case, a release does not need to be obtained, but a title attorney would need to read the agreement in order to determine if that’s the case.
Sounds super easy right?!
What if we still have a mortgage on the house?
If there’s a mortgage on the property, that’s in both spouses’ names, the only way to get the non-acquiring spouse’s name off of the mortgage is for the acquiring spouse to refinance.
IMPORTANT: The changing of title from one spouse to the other does NOT remove the non-acquiring spouse from the mortgage. This will require refinancing.
Yeah, we know it’s a lot of complicated information. But, it’s vital to know this if you want to stay in the house and take someone’s name off the title – and vice versa!
Your favorite New Orleans real estate agent has now acquired the RCS-D designation: Real Estate Collaboration Specialist Divorce. Schedule a chat with us BEFORE you go to mediation!
Ready to sell your New Orleans home? Message us below or text us!