What Happens If Your Name Is on the Deed but Not the Mortgage in a Divorce?

The dissolution of marriage creates enough discord and distress without you having to focus on the property ownership particulars, but complications do arise. For example, what if your name is on the deed but not the mortgage in a divorce? Would you still have ownership over the home or have to share with your soon-to-be ex-spouse?

Lincoln & Wenk, PLLC’s divorce attorney in Goodyear, AZ, explores the answers below. Arizona is a community property state. Let’s discuss whether these state laws might muddy the property ownership details in a divorce.

Understand How Deeds and Mortgages Differ

While deeds and mortgages signify property ownership under the law, these are two very different items. Notably:

• A deed is a document that shows who owns the property.
• A mortgage is a loan agreement between a property owner and a lender. It covers the property price until the owner can repay the loan amount in full.

Arizona treats the marital property as community property. If you or your spouse acquire property within your marriage, it belongs to both of you from the court’s perspective. With this in mind, having a deed vs. mortgage may not make much difference if you closed the sale while you were married.

Despite this important distinction, a lawyer can point out a few details that determine how deed ownership, mortgage, and divorce may affect the court’s property division decisions.

Questions To Ask if Your Name Is on the Deed But Not the Mortgage During Your Divorce

Many couples enter into joint property ownership when they purchase a house – both names go on the deed, and both individuals share responsibility for paying off the mortgage. Ask yourself the following questions, whether this is the case or not:

Who Primarily Pays for the Property?

Mortgage obligations fall to the person whose name appears on the mortgage agreement. If your name appears on the deed and mortgage, you own the property and carry its financial responsibilities.

So, what if a name is on the deed but not the mortgage in the divorce? In that case, the law says you have no obligation to repay the mortgage, as technically, that responsibility falls on whoever has signed the mortgage agreement. You will still claim property ownership with your name appearing on the deed, though, so it can be complicated.

Is Your Spouse’s Name Also on the Deed?

If your spouse also signed the deed alongside you, the property would belong to both of you, regardless of the mortgage agreement. That means you would both have a say in what happens to the property, which is why the court may grant you equal shares.

From there, you might sell your portion to your spouse or purchase their share. You could also sell the property to split the profits equally, as per the court order.

What Are Your Rights if Your Name Is on the Deed But Not the Mortgage?

Signing a deed without signing the corresponding mortgage would mean the financial responsibilities remain your spouse’s while ownership still belongs to you. That may change based on how or when you acquired the property. For example:

• You purchased it before marriage. Property purchased before marriage generally isn’t communal under the court. Assets purchased during the marriage count.
• You inherited it. Inheriting the property before or during your marriage might mean you retain full ownership following a divorce, but the court may allocate a portion of the house as marital property if your spouse contributed marital funds to it.
• You purchased it during your marriage. The court may treat marital households as community property, no matter whose name is on the deed. You both used it and contributed to it in varying ways.

What If Your Name Is on the Mortgage But Not the Deed?

We’ve covered if your name is on the deed but not the mortgage in a divorce, but what about the other way around? If your name is on the mortgage but not the deed, you own the property for good and all. However, since Arizona divorce courts exclusively handle property division through a community property lens, they can still award partial ownership to your spouse (often 50-50).

The upside is that if you receive half ownership while your spouse has the other half, you’ll likely also only be partially responsible for the ensuing mortgage payments. There are exceptions.

How a Court Might Determine Home Ownership During Divorce

Divorce courts that follow community property laws, such as those in Arizona, divide assets 50/50. You and your ex-spouse may receive half ownership each unless some extenuating circumstances apply. The property split could happen in one of the following ways:

Selling the Property and Splitting the Profits

Are neither you nor your ex-spouse satisfied with the court’s division? Do you have personal reasons you don’t want to keep the place? You may agree to sell the land and split the profits, relieving you both of the financial and maintenance responsibilities of homeownership and starting fresh.

Refinancing the Property to One Party’s Name

A second alternative would be for you or your ex-spouse to transfer legal ownership to the other party. You might want to move to a new home in a different town, so if the court awarded you partial property ownership, you could sell your ex-spouse your portion. If you had the deed and mortgage in your or both names, you can also refinance in their name.

This quitclaim process typically takes you off the mortgage and, by extension, off the title or deed once you complete the transaction.

Continue Ownership and Mortgage Payments as They Are

Of course, some couples want to keep their property paperwork as is, especially if young children can benefit from relative stability. Divorce upheavals already cause enough stress, so you and your ex-spouse might decide to leave property ownership in place. One party might also inhabit the house while caring for the children.

How an Arizona Divorce Attorney Can Help With Property Ownership

What if you don’t know whether your name is on the deed but not the mortgage in a divorce or things are up in the air? One solution is to seek legal advice as soon as possible. An attorney can work to keep your share of marital assets whether or not your name appears on the property deed.

Divorce judges often use the following process to determine who receives what:

Property Identification

You’ll figure out how to label each asset. Does it fall under community or separate property? Your attorney can help and argue for you if, for example, you want to claim ownership and the deed doesn’t show your name.

Asset Classification

You’ll label how and why an asset is in community or separate. If you purchased the home before you married, you will likely retain ownership, but there are exceptions if your spouse moved in and used their income or other marital funds to renovate it. Majority ownership arguments can resolve the conflict by recommending you buy back your ex-spouse’s portion.

Valuation

You’ll calculate how much your ex-spouse’s ownership costs and whether you can afford it. Ask:

• How much value did the marital home improvements bring to the property?
• How much was the property worth before those improvements?
• How do those numbers translate into ownership percentages?
• Will you both agree on the value or require mediation?

This complex step can take a while to complete. Your attorney has to factor in original cost versus current value and how those numbers translate into your ownership rights.

Division

Ultimately, the court will rule on who receives which assets when closing your divorce proceedings. Remember, Arizona awards each spouse one-half of the marital estate, excluding separate property. If you purchased the house before marriage or received it as an inheritance, you should be able to keep it and still access half of the collective marital assets.

If your ex-spouse used their own finances to improve the house during your marriage, the improvements’ valuation would count as part of their half. Usually, the court splits houses purchased during the marriage down the middle. You might have rightful ownership over half of the property, no matter whose name is on the deed.

Are both spouses claiming property ownership of a shared household? Your attorney can assist you in identifying purchasing or selling options that adhere to the court’s final ruling.

Lincoln & Wenk, PLLC’s Divorce Lawyer Can Help You Navigate Property Ownership During a Divorce

If you’re in Arizona, you have the option to contact Lincoln & Wenk, PLLC, if your name is on the deed but not the mortgage in a divorce and vice versa. A capable divorce attorney can help you navigate community property division and maintain your ownership of separate property. A formidable legal team can also assist you in situations like when your spouse stopped paying the mortgage on a shared household.

Divorces create strain, even when they go smoothly. Seek support – book a free consultation with Lincoln & Wenk, PLLC, in Goodyear, Arizona. Call 623-294-2464 to book with us.