Full question:
I am recently divorced, my ex-wife is keeping the house, and I have already been paid my share of the equity. She is going through the assumption process to take over the loan and needs me to give her a quit claim deed in order for the loan assumption to go through. However, there will be a period of time before I am released of liability from the loan because the bank is in another state, and will need me to mail the deed to them. Am I at risk during that time period being responsible for the loan, but no longer having the house as collateral? And is there anything I can do to relieve myself of that liability during that time?
- Category: Real Property
- Subcategory: Mortgage Satisfaction
- Date:
- State: Colorado
Answer:
Your liability during the interim period depends on the lender's policies and the terms of the loan assumption agreement. It's essential to check with the lender regarding any due-on-sale clause in your mortgage. This clause could allow the lender to demand full payment of the loan if the property is transferred without their consent.
Most mortgages include a due-on-sale clause, which means the lender can call the entire loan balance due if the property is sold or transferred without their approval. Therefore, it's crucial to confirm with the lender whether they will allow the assumption without enforcing this clause.
To protect yourself, you may want to discuss with the lender how to expedite the release of your liability and ensure that the assumption process is handled promptly.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.