One of the common issues that a divorced couple deals with when handling real property is conveying the marital real property accurately and smoothly. Generally, the couple will sell the home together or one of the spouses will remain in the property and continue to paying the mortgage as part of the property settlement agreement (“PSA”). The PSA is made part of the final divorce decree by reference. Often times, attorneys are involved in the divorce and will aid in sorting out this issue.
If the couple agrees to sell the home and split the proceeds in some form or fashion, then no deed pursuant to divorce is needed in this situation. The couple will simply sign a Deed to the purchasers at closing. However, if one spouse elects to remain in the home, then Deed Pursuant to Divorce becomes applicable.
Virginia Code 58.1-811(A)(15) permits this type of deed and also waives any recording fees since it acts as a deed of gift. In essence, each spouse will need to sign the deed as a grantor so they need to cooperate throughout the process. The grantee will be the spouse that remains as the owner of the home.
One major misconception with signing a Deed Pursuant to Divorce is that the mortgage still remains in the name of the borrowers at the time of purchase. Therefore, if both spouses were borrowers initially, then they remain borrowers. Generally the grantee spouse will refinance in his/her own name to remove the other spouse from the mortgage. Often times, this will be (and should be) mentioned as a requirement in the PSA. If the grantee spouse is unable to refinance, then perhaps, selling the home is a better option.
In the end, the Deed Pursuant to Divorce instrument clearly conveys the property from a married couple to one of the individuals. It helps the title examiners know exactly what happened to the property during that period of ownership and prevents a break in title.
One extra tip – Virginia provides extra title protection for married couples such that a judgment lien against one party will not attach to the home if the married couple owns the home as tenants by the entirety (this verbiage would be on the deed). If the title is severed through divorce or by deeding the property to one of the spouses, then that title protection is lost. It’s important to perform a title search in order to be aware of possible judgment issues prior to signing a deed or finalizing the divorce.
If you or someone you know needs further assistance with real estate, wills, trusts or estate law in Virginia, please click the “Schedule a Consult” link above and a receptionist will assist in connecting you with an attorney. Hanger Law serves the following cities and counties in the greater Hampton Roads area: Virginia Beach, Chesapeake, Norfolk, Portsmouth, Suffolk, Hampton, Newport News, Yorktown, Seaford, Poquoson, Williamsburg, James City County, Isle of Wight County, Smithfield, New Kent County, Toano, Gloucester, Hayes.
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