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Quit Claim vs. Interspousal Grant Deed

People sometimes (incorrectly) believe a “Quitclaim Deed” is enough to disclaim one spouse’s interest to another (example: Spouse 1 signs a quitclaim saying House is Spouse 2’s separate property). When dividing property at the time of divorce however, what we look at is the source of funds used to purchase the home and/or to make the monthly mortgage payments. If the community made the mortgage payments and the intent of the parties in signing that Quitclaim Deed is not clear, then the community acquires an interest in that property. That interest is then subject to division and reallocation at the time of divorce.

Consider an Interspousal Grant Deed instead, if your intent is to relinquish all interest in the property you are transferring to your spouse. The main difference between an interspousal transfer deed and a quitclaim deed is that, when using a quitclaim, the spouse who is giving up their interest in the shared property may still be liable for the mortgage or other debts associated with the property. Always keep in mind however, that the bank - the mortgage holder - looks to whose name is on that loan. The bank is not a party to your prenup or impacted by whose name is on title when someone defaults on that loan. To be safe, to fully transfer a property from one spouse to the other, especially in the event of a divorce, the loan will need to be refinanced to include the right name on the debt.

An interspousal transfer gives full interest in the property to the transferee, whereas a quitclaim leaves the transferor still liable for any obligations related to the property, even though the transferor no longer has a residential interest in it.


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