Conside etting divorced...what to do about rentals and mortgages?

Question

We are a couple with three rentals and our primary home. We have agreed to share the properties with her keeping the primary and one rental, me the other two. She is refinancing her two properties to take me off the mortgages and wants me to sign quitclaim deeds as well. I'm not refinancing my two so she remains on the mortgage and jointly owns the properties.

Currently our plan is to remain married for tax benefits and to allow for a better CGT allowance if she sells one of her properties in the next two years. We are very amicable and keen to work with each other to get the best outcome. However I'm a bit concerned about signing quitclaims on two properties. She thinks that this has to happen as when we do eventually divorce, if I'm still on the mortgages then she would be forced to refinance to remove me....is this true?

When you divorce do the mortgage holders automatically demand that the person who keeps the property has to refinance? I thought we could just do quitclaim deeds and keep paying the mortgages ourselves without notifying the mortgage co that we have divorced. Don't they only care about getting paid each month?

This is all taking place in California where I believe that the law says we own 50/50 until a divorce actually occurs.

Tyler Hungerford · Answer

I would HIGHLY recommend you speak with a family law attorney before signing ANYTHING regarding your properties. Because this is CA, properties are worth a lot of money. You should not give away yours so quickly. Again, consult an attorney on this stuff. You will need someone very good to help guide you through this. This is an extremely complicated situation since it is more than just 1 piece of property. Do not just give away your side of the property. That would be the worst thing you could do. Protect yourself and get advice from an actual attorney. These forums are great, but this isn't something you want to mess up.

Robert D Dismukes · Answer

@Matt Small You really should hire an attorney to tell you what you need to do .     But , I’d recommend having her quitclaim her interests in the two you are keeping.    She may have a second thought later when her attorney says it’s legally hers . She may encounter hard times , or someone gets her worked up about it.   You just don’t know.    Protect your ASSets .       GLTY , and this is not legal advice.

Victor S. · Answer

if she's as amicable as you say she is, then you shouldn't have any issues getting a seasoned attorney's opinion on what's the best course of action for you is right now.

Eric James · Answer

You each get lawyer to de with these issues. There are no excuses not to do so. And you do not remain married for tax purposes. You'll regret it

Bill Gulley · Answer

She is correct, you execute a quitclaim deed, then she can refinance in her name, her lender can explain that and they may have you sign the deed at the refi settlement. She may do the same for your properties but if you don't refinance she will remain on the mortgage, divorced or not.

Sounds to me like you should see an attorney and consider putting the properties in an LLC (LLCs) where you divide assets, liabilities and management. CA is a community property state, you should also consider a Will after you execute the deeds, see an attorney.  But, I agree that a divorce is best if the marriage is dead, your reasons not to are no reason not to.  Good luck!

Matt Small · Answer

Thank you for the replies. Thank you Dorianne

Eric Gerakos · Answer

Do NOT sign a quitclaim without first consulting with an attorney.

Dorianne Reynard · Answer

@Matt Small

Hi Matt,

I am a family law paralegal in California with over 25 years’ experience working with attorneys and high net worth clients to protect assets, divide assets, and enter into legal and enforceable agreements. I cannot give you legal advice because I am not an attorney. So, my personal advice is—consult with a family law attorney who has a lot of experience with asset division (obv particularly REI). Look for a Certified Family Law Specialist. Consultations are inexpensive through your county’s bar association—usually $35-50. At that consultation, you can lay out your scenario and ask specific questions about the law and how the attorney has handled such matters in the past. You’ll get a feel for whether they know what they’re talking about. It may even be worth paying for second and third opinions if you don’t find the answers satisfactory.

Also, the attorney will be able to advise you — not only of your rights—but also your legal DUTIES to your spouse and your spouse’s legal DUTIES to you.

You’ll prevent EXPENSIVE problems down the road if you consult with a family law attorney now.  You and your wife could jointly consult with the same family law attorney regarding this matter, understanding that neither of you could use that attorney on your own in the future (this may be helpful at this point in maintaining trust).

Happy things are amicable!!! Best of luck!

Dorianne

Matthew Crivelli · Answer

@Matt Small yeah bro, get a lawyer! Sounds like you have a good relationship but damn she could take you for a ride if you go in blind.

Steve Vaughan · Answer

Yes.  She receives two quitclam deeds and so do you.  Doesn't matter if you refi or not to me.

Seek legal advice.  Initial consultations aren't expensive.

Conside etting divorced...what to do about rentals and mortgages?

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