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Divorce Doesn't Untie the Mortgage Knot

On December 22, 2017, The Tax Cuts and Jobs Act was signed into law. The information in this article predates the tax reform legislation and may not apply to tax returns starting in the 2018 tax year. You may wish to speak to your tax advisor about the latest tax law. This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.

Divorce Doesn't Untie the Mortgage Knot
Often, when a couple separates and divorces, one spouse continues to live in the family home. Frequently, the departing spouse will simply quitclaim the property to the spouse retaining the home. When filed, the quitclaim deed takes the departing spouse's name off the title. However, it does not remove that spouse's name from the mortgage. 

So if you quitclaim a property to your spouse and he/she is late with payments, it will hurt your credit rating. To make matters worse, there is no way for you to get your name removed from the loan. Frequently, divorce attorneys fail to consider this adverse consequence. It may be in your best interest to require that the home be sold, or that your spouse refinance it as part of the divorce agreement.

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