[WSBARP] Post-Divorce QCD Catch 22

[Kerry Richards]

Dear Cat:
The Family Court will not alter the property settlement, in my experience. Once these resolutions on property are entered into the court file as a decree or as a property settlement agreement, they are done. Unfortunately, or fortunately, depending upon what side you are representing, the time frame for any refinance  is is a term that should’ve been resolved in the negotiations for a final resolution.
Before 2008, most banks would have accepted the hold harmless provisions of a decree. Perhaps the lending institution would once again except a hold harmless as protection for their new borrower. The $1 million in equity may be a convincing factor, especially if the full loan amount and the monthly payments work for the new borrower.
Negotiations with the bank will prove more fruitful and less expensive than a tried and failed attempt to alter a property settlement agreement on the family law motions calendar.
Just sayin’
Kerry A. Richards
On Aug 2, 2021, at 12:27 PM, Catherine Clark <Cat at loccc.com> wrote:


Agree with all that and thank you.  I think the easier way is to go back into the family law matter and ask the court to modify the final decree to require her to refinance or sell or take whatever steps are necessary to remove him from the loan given the ongoing unjust enrichment that is occurring within 6 months to a year and if it doesn’t happen then, she must sell it.

There are no children involved and the home has about 1M in equity.



Catherine “Cat” Clark
Law Office of Catherine C. Clark PLLC
2200 Sixth Avenue, Suite 1250
Seattle, WA 98121
Phone:  (206) 838-2528
Cell:  (206) 409-8938
Fax: (206) 374-3003
Email:  cat at loccc.com<mailto:cat at loccc.com>

NOTICE: The information contained in this electronic information transmission is confidential. If you are not the intended recipient, or the employee or agent responsible for delivering it to the intended recipient, you are hereby notified that any use, dissemination, distribution or copying of this communication is prohibited.  If you received this communication in error, please immediately notify the sender by telephone at (206) 838-2528. Thank you.

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Joseph McIntosh
Sent: Monday, August 02, 2021 11:46 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Post-Divorce QCD Catch 22

The divorce decree doesn’t bind the lender to remove the husband from the loan.  You can apply to the lender to have husband removed, but that option may be blocked if there is an active forbearance or deferment.   A refinance may be difficult for the same reason.   A due on sale clause may be triggered by the QCD, but I doubt it gets enforced under this somewhat common scenario involving a transfer between ex-spouses.  I don’t think you can force the wife to refinance w/in some designated period of time because she needs a willing lender which may be out of her control, but I think you can push her to try, and maybe that’s the relief you ask from the court – an order compeling her to make immediate efforts to refinance to effectuate the objectives of the original order.

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Catherine Clark
Sent: Monday, August 02, 2021 11:22 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] Post-Divorce QCD Catch 22

I have a question on Post-Divorce QCD.  In this situation, husband gives QCD to wife who agrees that H is no longer responsible for the note and she indemnifies him.  Decree says that in the event of a refinance, he is to be removed from the loan but does not have a time period as to when a refinance should happen—it is open ended.       Wife is in deferment on her mortgage payments with the bank and Husband would like to buy his own home.  Of course, Husband’s lender sees obligation on loan with ex-wife and that is figuring into his debt-to-income ratio and causing problems.  Closing is next week naturally.

Husband asks what can he do to get out from under this.  Agree that the decree language is problematic.  Is it a motion to amend the decree to require a refinance within a reasonable period of time or is it a declaratory judgment action against the bank (assuming it refuses to remove husband from loan when asked) based on the decree and a claim for unjust enrichment against the wife for using husband’s credit to her advantage.  If we raise this with the bank, wouldn’t the due on sale clause have been triggered by the QCD from the husband thus giving the Bank some reason to foreclose?

All thoughts appreciated.

Thanks.

Catherine “Cat” Clark
Law Office of Catherine C. Clark PLLC
2200 Sixth Avenue, Suite 1250
Seattle, WA 98121
Phone:  (206) 838-2528
Cell:  (206) 409-8938
Fax: (206) 374-3003
Email:  cat at loccc.com<mailto:cat at loccc.com>

NOTICE: The information contained in this electronic information transmission is confidential. If you are not the intended recipient, or the employee or agent responsible for delivering it to the intended recipient, you are hereby notified that any use, dissemination, distribution or copying of this communication is prohibited.  If you received this communication in error, please immediately notify the sender by telephone at (206) 838-2528. Thank you.

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Kary Krismer
Sent: Monday, August 02, 2021 6:24 AM
To: wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Post-Divorce QCD Catch 22


I think everyone agrees that the decree could be sufficient.  I'm just uncertain if the decree needs to be recorded in the same county if not entered in the same county.  Then there's also the issue of whether the decree has sufficient specificity as to the property.  But it may be all that needs to be done is point out the decree to the title company and see if they will remove the ex-husband as a vested owner.  If that happens the issues with the bank should disappear.

Kary L. Krismer

206 723-2148
On 7/30/2021 12:44 PM, Patrick McDonald wrote:
I agree with Joseph. The divorce decree should transfer title upon entry with the court and is a public record.

Patrick

_______________________
Pody & McDonald, PLLC
1200 Fifth Avenue, Suite 1410
Seattle, WA 98101-3106
T: 206-467-1559
F: 206-467-4489

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com><mailto:wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Joseph McIntosh
Sent: July 30, 2021 12:25 PM
To: cole-gilday at stanwoodlaw.net<mailto:cole-gilday at stanwoodlaw.net>; WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com><mailto:wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Post-Divorce QCD Catch 22

I would think the divorce decree, especially if recorded, would effectively evidence a transfer the real property so as to satisfy the lender’s concerns.  I routinely encounter refinances following divorces where there was just a decree awarding the new borrower title, but no QCD.  I don’t think the county recorder can prevent you from recording the court order.

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Ryan P. Coon
Sent: Friday, July 30, 2021 12:02 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Post-Divorce QCD Catch 22


Listmates,

I've got a client needing to record a QCD to separate property post-divorce but is running into what seems to be a "catch 22" problem so I'm looking for some creative solutions.

Client by divorce decree is awarded the family home and thus needs to record a QCD from ex-spouse to separate the property. However, there is a large amount of outstanding property taxes due (several years worth) and the county (Island) is refusing to record the deed without the taxes being made current. Client doesn't have the funds to bring taxes current so is seeking a loan to pay the taxes. However, client is having trouble procuring a loan because the bank is requiring signature of ex-spouse since ex-spouse's name is on the property but ex-spouse will not sign off on the loan.

Thus, client can't record a QCD because they don't have the money to pay the taxes but their having trouble getting the money to pay the taxes without first recording the QCD.

Any thoughts or creative work-arounds for this would be much appreciated, thank you.
--

Very Truly Yours,
Ryan P. Coon
Law Office of Cole & Gilday, P.C.

10101 - 270th St. NW
Stanwood, WA 98292
(360) 629-2900 (Telephone)
(360) 629-0220 (Fax)

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