Interspousal Transfers Versus Quit Claim Deeds

A deed is a written document that legally transfers property from one person or entity to another. Through a deed, one spouse can give his or her own property to the other, and the property becomes the receiving spouse’s separate property. There are many ways to accomplish a property transfer, but two of the most common ways to transfer property in a divorce are through an interspousal transfer deed or quit claim deed.

What is an Interspousal Transfer Deed?

An "interspousal transfer deed" transfers title (ownership) between a married couple. A gift given by one spouse to the other during the marriage is considered "separate" (owned separately), not "marital" (mutually-owned) property. This is important because through a deed, marital property can become separate property or vice versa, which is an important distinction in a divorce.

An interspousal transfer deed can be useful when one spouse has poor credit, and the couple wants to refinance their home. To receive a better mortgage interest rate, the couple may decide to use an interspousal transfer deed to transfer title to their home to the spouse with better credit. Some other examples of circumstances where a couple might use an interspousal transfer deed include the following:

  • one spouse wants to add the other spouse to title of separate property
  • the couple wants to transfer title to property as a result of divorce settlement, and
  • where one spouse must be removed from title for financial or legal reasons.

What is a Quit Claim Deed?

A "quit claim deed" transfers whatever interest one spouse has in property to the other spouse. An important difference between an interspousal transfer deed and a quit claim deed is that a quit claim comes with no guarantees or promises about property ownership. Some examples of circumstances where a couple might use a quit claim deed include:

  • to transfer title to property as a result of divorce settlement, and
  • where one spouse wants to give up interest in property.

When to Use an Interspousal Transfer Deed vs. Quit Claim Deed

Interspousal transfer deeds can be used to avoid tax liability when transferring property. When title to property is transferred, the county may impose a transfer tax and may reassess the value of the property which could result in higher property taxes. However, an interspousal transfer deed is a special kind of transfer that is exempt from transfer taxes and ultimately a cost-effective method of transferring property between spouses.

Quit claim deeds are very simple and use a form that is easy to find online or at office supply stores. However, with a quit claim deed one spouse may give up rights to certain property but not necessarily liability for any mortgage or lien on the property. A problem could arise if one spouse is awarded the marital home in a divorce and the other spouse uses a quit claim rather than interspousal transfer deed to transfer his or her interest. The spouse that gives up his or her interest to the house may still be responsible for one-half of the mortgage debt because their liability can’t be transferred through a Quit Claim Deed.

Preparing a Deed

Whichever deed you decide to use, it’s important to make sure that the deed is completed and recorded correctly to be valid. The deed should be completed and must:

  • be in writing
  • list the spouses involved in the transfer
  • identify the property being transferred by address and/or legal description
  • be signed before a notary public, and
  • be recorded in the county where the property is located.

For more specific information regarding the use of interspousal transfer deeds and quit claim deeds in a divorce, please contact a local family law attorney for help.

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