real estate

Transfer deed snatches your right to house

Steve McLindenq_v2.gifDear Real Estate Adviser,
My husband had me sign an interspousal grant deed. If we get a divorce in the future, does it mean I have signed away my rights to the house?
-- Dawn

a_v2.gifDear Dawn,
Possibly. The deed you signed, technically called an interspousal transfer grant deed, likely granted sole ownership of the house to your husband. There are a few small gray areas though, which we'll hit in a minute.

First, for our readers' benefit, an interspousal transfer grant deed is commonly employed in divorce cases to transfer community property to one spouse. A more equitable course is to have the spouse remaining in the home agree to refinance under his/her name or to sell the place to give the ex-partner a fair disbursement of equity, depending on the circumstances, of course.

You don't mention the circumstances under which you signed this and who was paying the preponderance of the housing costs. So it's difficult to provide an answer without knowing what the deed purports to convey, and why it was signed. Sometimes lenders have been known to ask the spouse of the borrower to sign an interspousal transfer grant deed so that a vindictive spouse can't try to claim half of the recovered debt should a foreclosure sale happen in the future. Other times, interspousal transfers are arranged if one spouse's credit problems are hampering the other spouse's finances, even if the marriage is rock-solid.

Those reasons aside, I sure hope you weren't duped into giving away your rightful half interest in community property only to have your hubby turn around and file for a divorce. Here another kicker: If you two divorce, you might still be responsible for the mortgage in the eyes of the lender should your spouse struggle to make payments!

It's important to note that state laws vary considerably on this. In California, where a property bought during a marriage is usually split equally upon divorce, community-property law can trump some interspousal transfers in court. As an FYI, the party transferring such a deed is usually obligated to inform the mortgage company before a property interest is conveyed. Did you do this?

Assuming for now that the transfer deed was a legal one, that you both signed off on it and had it notarized and that it held an accurate description of the property, there may be little you can do. However, if you believe a divorce is imminent, you should consult an attorney posthaste about the structure of the agreement, your liabilities or any extenuating circumstances that may have led you to sign it.

Unfortunately, dirty "deeds" aren't undone dirt cheap.

To ask a question of the Real Estate Adviser, go to the "Ask the Experts" page, and select "Buying, selling a home" as the topic. Read more Real Estate Adviser columns and more stories about mortgages.

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