If a married couple jointly sign for a mortgage loan and then divorce, do both names remain on the loan?
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If a married couple jointly sign for a mortgage loan and then divorce, do both names remain on the loan?
Even if one of the parties has quick-claimed his/her name off the deed?
Asked on October 5, 2011 under Family Law, Ohio
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
A contract is a contract. If a person agrees to be financially responsible for a mortgage loan, they do not relieve themselves from liability by taking their name off of the deed. Ownership of property does not affect a person's obligation to repay a mortgage. The only way to get a name off is to refinance the property or ask the bank for a "novation". That is where the original loan stays in place but one of the mortgagor's names is removed by the lender. However, there are strict requirements for this and typically it is granted in only very limited circumstances. The fact is that from a lender's perspective, the more borrowers it can look to for repayment the better.
That having been said, if a divorce decree provides that a refinance must be done is a reasonable time period and it is not done, then possibly the property can be ordered to sold and the mortgagepaid off. Additionally, if one spouse was to have assumed all financial liability for a mortgage but allowed a default, the innocent spouse could sue to recoup any out-of-pocket losses that they suffered as a result.
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