[WSBARP] Post-Divorce QCD Catch 22
Ryan P. Coon
cole-gilday at stanwoodlaw.net
Mon Aug 2 16:31:07 PDT 2021
An update and some clarification on this.
First, the divorce decree was in a different county than the property at
issue. We looked first at the possibility of recording the divorce
decree. However, it appears that the divorce was done mostly, if not
entirely, pro se. As such, there are problems with the property
description (TPN has an error in it and for the "legal description" the
parties simply inserted the street address rather than the legal
descprition). Thus, the divorce decree, unless amended, wouldn't be
sufficient, even if recorded in the county where the property resides.
We could simply get a corrected order/decree but where the ex-spouse is
willing to sign a deed we were looking into just using a QCD to possibly
save time/money.
Second, the issue with taxes needing to be paid before a QCD is recorded
was reported by our client. We were caught off guard by this as well and
so we sent a query on this to the county treasurer. We just heard back
today that our client is NOT required to pay the taxes before being
allowed to record. Either our client misheard or misunderstood, or
something has changed since our clients initial inquiry.
Consequently, we're just going to record a QCD and cross our fingers
that recording goes smoothly. I'll post back to the list if it turns out
that our client really does need to pay any of the taxes before they can
record a deed. Thank you everyone for your input!
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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On 8/2/2021 1:24 PM, Kerry Richards wrote:
> 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
>> <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
>> <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)
>>
>> This message contains confidential and privileged information
>> that is intended only for the named recipient(s). Unless you are
>> the named recipient or authorized agent thereof, you are
>> prohibited from reading, copying, distributing or otherwise
>> disseminating such information. If you receive this
>> communication in error, please notify the sender immediately.
>>
>> ***Disclaimer: Please note that RPPT listserv participation is not restricted to practicing attorneys and may include non-practicing attorneys, law students, professionals working in related fields, and others.***
>>
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