Today, more than any other time I know of, couples are doing more DIY dissolutions and divorces. Nothing wrong with that – until something goes wrong. I think it’s great when couples can agree to disagree and separate and move on with their lives.
Unfortunately, a lot of DIY sites don’t make it as easy as one would think. One of the most common places people make a mistake is with their Quitclaim.
A Quitclaim is probably the most common of three types of real estate deeds used to convey property. For instance, when a couple divorces, and one partner agrees to surrender their ownership of a home. A Quitclaim is used. A Quitclaim is used to convey the seller’s interest in a property to the buyer. A Quitclaim has other uses as well, but for now, let’s focus on the trouble people often find themselves in.
When you write a Quitclaim, one item it should contain is the buying price of the property. In a divorce or dissolution, if no money is changing hands, that amount should be zero. I have seen couples misunderstand that value and enter the property value at the time of the dissolution. That doesn’t affect the overall outcome of the transition. The interest in the property will still be transferred.
Two problems arise for the “buyer” now: First, when the buyer attempts to file the Quitclaim, they will have to pay taxes on value listed on the Quitclaim. Second, if the “buyer” does file the quitclaim as it, the value of the property will now be listed as the price on the Quitclaim. If the “buyer” ever decides to sell, real estate agents doing a fair market value assessment will see the Quitclaim value as the value of the home. This creates an uphill battle to sell the home for it’s true value.
What’s today’s lesson? Hire an attorney. If DIY is your preferred way to go, please do your homework on anything you don’t understand.