Own AZ home for 2 yrs. I am sole on Mtg. Spouse and I on deed. Spouse wants to quit claim to me. Does that trigger a "due on sale" with?

Asked by Leeza567, Phoenix, AZ Sun Dec 27, 2009

the lender? I bought a home in AZ about 2 years ago. The mortgage is under my name alone, but my spouce is on the deed of trust. If my spouse does a quit claim and take their name off the house does that trigger a
"due on sale" with the lender since I am the sole person on the mortgage?

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Jeremy James…, Agent, Scottsdale, AZ
Mon Dec 28, 2009
If one spouse signs a Quit Claim Deed to remove their name from the Deed as the result of a divorce settlement? This is certainly a transfer in ownership. However, federal law prevents the Lender from demanding immediate repayment of their loan simply because two joint co-signors get a divorce. However, the spouse who signs the Quit Claim Deed still remains liable on the Mortgage, even though their name is no longer on the Deed.

Lenders are entitled to know to whom they are loaning money, and to set terms and conditions. Moreover, the due-on-sale clause is now required by various federal agencies. While such a clause may hinder some real estate deals, they makes solid business sense.
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Carlos Ramir…, Agent, Mesa, AZ
Sun Dec 27, 2009
On this one I wont even try to give my opinion. That information will be on your contract with the bank (loan documents), and your best bet is to get the advice of a professional who deals with loan documents and is authorized to give legal advice.

Carlos J. Ramirez, PC, ABR, CNE
Associate Broker/Realtor, HomeSmart -
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, ,
Sun Dec 27, 2009
Hi Leeza567,

First, always check with your lender, the mortgage holder, &/or with a real estate attorney to be sure what your position would be in this scenario.

That said, in my unofficial capacity, it is my opinion that based upon your description, you initially purchased & financed the home in your name alone. You more than likely quit claimed your spouses name to the property after your purchase, not simultaneously (could have been the same day or 23 months later).

Given that the mortgage agreement is between you & the bank lending you the money, it does not seem that you would have changed the terms of the agreement by "undoing" the initial quit claim.

I hope that helps,

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct
Web Reference:  http://www.ezAZloan.com
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