A quitclaim deed, discharge and a bank walk away. What do these items have in common? For me, nothing, that is until this past week. On Monday different clients came in to my office with the same conundrum.
Clients with Discharge and Bank Walk Away
Each received a bankruptcy discharge. I allowed neither to reaffirm their mortgage debt. For one, it was an easy choice. He wanted to rid himself of the home. The other wanted the home, but subsequent marital issues led each spouse to abandon the home. In each case they moved out, and the bank walked away from the home that secured the mortgage.
Quitclaim Deed Is…
One client who spoke with a realtor thought that she could not get the property out of her name without paying off her mortgage. WRONG. A quitclaim is a deed that transfers only the interest in property you own subject to any liens or other charges against the real estate. In her case she wants out of the home, bad memories. Hubby wants back in. She doesn’t want homeowner responsibilities. Best idea for her, get it out of her name. A quitclaim deed to hubby will achieve that goal. Neither has financial responsibility on the actual loan from the discharge. a realtor thinks only in term of clear, marketable title. Theirs is a world of warranty deeds. For you who care, in such a deed you guarantee that the property is free and clear of any liens or encumbrances. How’s that for lawyer talk?
The Bank Walk Away
In a bank walk away your lender makes a business decision not to buy the home from foreclosure. It is happening more and more often in Lorain and Cuyahoga County Ohio. The same reason the bank does a walk away is the same reason you do not want a home you abandoned in your name. Bankruptcy does not relieve the property owner from cutting the grass, removing the snow and repairing the property. If you quitclaim the property to another after discharge, you are off the hook for those things even in light of a bank walk away.
If you still own the property but don’t want to live in it after a bank walk away you can lease it. But that entails the obligations of ownership. Instead of leasing it, offer to quitclaim the property to the new “tenant.” He of course takes the property subject to a lien, which might be foreclosed again, but you are off the hook for maintenance and repairs. The tenant has a place to live “rent free”. Looks like a win-win.
Real Estate Has No Salable Value
The only real draw back is that no one will really be able to sell the real estate because the lien will exceed the property resale value, but the good part is that with a quitclaim deed, your discharge and the bank walk away no one will be on the hook for loan payments.
Other attorneys playing the alphabet game are:
- Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell says Q is for Quality Bankruptcy Attorney.
- New York Bankruptcy Lawyer, Jay S. Fleischman says Q is for Quiet.
- Jacksonville, Florida Bankruptcy Attorney, J. Dinkins G. Grange addresses Q is for Quick.
- Colorado Springs Bankruptcy Lawyer Bob Doig discusses Q is for Qualifying.
- Kauai Bankrutpcy Attorney, Stuart T. Ing says Q is for Qualified Retirements.
- Allen Park, MI Bankruptcy Attorney, Christopher McAvoy writes Q is for Questions about bankruptcy.