Quit claim deeds and selling a house before the divorce is final

[Chris P]

This might be really technical, but I was hoping some of the fine people here would know.

When does a quit claim deed on a house going to one party in a divorce go into effect? The day the quit claim is signed? The day the divorce is final? Or the day it's entered into the deed book? In my case, these were three different dates.

My MC signed a quit claim at the divorce filing, but his soon-to-be-ex-wife wants to put the house on the market now (to buy out his portion of the equity), before the divorce is final. Can she do this?

Or is it more likely they would agree to put the house on the market in the divorce filing? If so, when can the house be listed? Can it be before the divorce?

The book takes place in Alabama, but I'm sure it's similar in many states.

[shadowwalker]

My understanding is that once the quit claim is signed, it's final. It's more or less a statement that the grantor has no legal interest in the property, but there's no guarantee that it's debt-free, no guarantee of condition, no guarantee that other people may have an interest in the property - simply that the person signing it no longer can claim the property in any way, shape, or form. It goes into effect on the date it's signed, but in most states there is a time frame in which it can be contested (typically 2 years).

[jclarkdawe]

First thing I want to note is that deeds are usually either quitclaim or warranty. This refers to the grantor's guarantee of title or not. In a quitclaim deed, you are not guarantee the chain of title.

And remember that all of this can change very easily with a slight change in facts.

Originally Posted by Chris P

This might be really technical, but I was hoping some of the fine people here would know.

When does a quit claim deed on a house going to one party in a divorce go into effect? The day the quit claim is signed? The day the divorce is final? Or the day it's entered into the deed book? In my case, these were three different dates. A deed is effective from the date it is signed. However, if a subsequent deed is filed with the Registry of Deeds prior to the first deed, then the subsequent deed will probably have title. However, there can be an agreement as to when the deed can be filed or is effective. For example, you could do a conditional deed that becomes effective upon the date that the divorce is finalized.

My MC signed a quit claim at the divorce filing, but his soon-to-be-ex-wife wants to put the house on the market now (to buy out his portion of the equity), before the divorce is final. Can she do this? Once the husband signs the deed, his interest in the property will terminate, subject to any agreement. If he's going to be paid subsequently, he's going to want some sort of an agreement or he's going to be out of luck. By agreement, she can put the property on the market at any time. Many properties are sold during the divorce process.

Or is it more likely they would agree to put the house on the market in the divorce filing? If so, when can the house be listed? Can it be before the divorce? As long as there is an agreement, they can sell it at any time. If there is no agreement, they can't sell it until there is a court order. You can obtain a court order for the sale of property during the divorce process and before the final decree.

The book takes place in Alabama, but I'm sure it's similar in many states. Basic principles of property law are the same. Divorce law and practice might be slightly different, but it's unlikely the courts are going to deny people the right to sell their property during the divorce process.

Here's the big question. Is there a mortgage and how is that being handled?

Best of luck,

Jim Clark-Dawe

[readitnweep]

Actually, this probably depends on the laws of the locale in question. When I was in the business, a quit claim wasn't in effect until it was recorded with the county.

[Chris P]

Thanks everyone! I was basically following my own experience except I didn't sell the house until about a year after the divorce. I didn't know what would be different if it was listed or sold before.

I owned the house before we married, so we agreed I would keep it and she signed the quit claim to me. Since we refinanced in both of our names (she had homestead rights in Mississippi) when we added on, functionally all the quit claim did was allow me to sell the house without her having to be involved. She would still be liable if I defaulted on the mortgage since the bank doesn't care if we're married or not. The divorce decree said I would be responsible for the mortgage payments, and pay her in monthly installments for her portion of the equity to an agreed-upon amount (or lump sum if the house sold). She didn't insist I refinance in my name only since I was upfront about wanting to sell it anyway.

Anyway, I think I have enough to go on here, unless someone knows if Alabama has special provisions I should be aware of.

[jclarkdawe]

Originally Posted by readitnweep

Actually, this probably depends on the laws of the locale in question. When I was in the business, a quit claim wasn't in effect until it was recorded with the county.

Sort of. And this is why the law is so much fun.

Michigan is what is called a "race/notice" state, which is probably now most jurisdictions. Let's run through a scenario.

Tom sells lot A to Bob on Monday. Bob heads to the Registry of Deeds to file it, but is distracted by Strip-o-rama and stops there to enjoy the view.

Tom sells lot A to John on Tuesday. Note that Tom has committed fraud, but that doesn't matter to Bob or John. John gets in his Mustang GT and races to the Registry of Deeds and files the deed he received.

On Wednesday, Bob stumbles out of Strip-O-Rama and makes it to the Registry of Deeds. Bob files his deed, not checking to see whether anyone has filed prior to him.

Who owns the property? Simple answer is John. He won the race to the Registry of Deeds. Tom, meanwhile, is enjoying Bermuda.

However, let's get rid of Bob. Tom sells Lot A to John and John does not record the deed for three years. Tax collector goes to collect the back property taxes. John argues that Tom is responsible because the deed had not been recorded. John loses. John is responsible for the property taxes. (Again, simple answer. Actual answer might become vastly more complicated.)

Ain't the law fun?

Best of luck,

Jim Clark-Dawe

[MAS]

The answer to your questions will depend on the laws of the state where the land is located. However, in most states (if not all), a deed is not effective until it is delivered to the grantee/buyer, or to someone on their behalf (such as delivery to an attorney or title company for recording purposes). So if the wife signed a quit claim deed and then put it in a desk drawer, the deed would be totally ineffective due to lack of delivery.

One additional note: In a divorce, the court generally acquires jurisdiction over the assets of the divorcing couple, and has the power to allocate those assets. In most instances, the court will honor an agreement as to division of property between the parties. However, if the wife quit-claims the home to the husband, there still remains a possibility that the judge might award the property to the wife in the final divorce decree, or the decree might award the wife some portion of the proceeds of sale, or the decree might order the real estate be sold and the proceeds divided between the husband and wife, etc. So the deed would be valid, but the judge could still rearrange the property division within the context of the divorce.