A reader of the New York Times Ask Real Estate column asked, how do I transfer my cooperative apartment to my soon to be ex as part of my divorce settlement.
A transfer of title of the jointly owned martial home from spouse to the other is one of the two possible outcomes for real estate in a divorce. The alternative is that the property is sold immediately or at a defined time in the future, generally after the children left the home.
Assuming the divorce was settled, the written settlement agreement should require the transferring spouse to deliver to the other a deed for the property or, in the case of a cooperative apartment, an assignment of the proprietary lease and stock certificate, with all the required real estate property tax transfer documents.
But that is only part of the process.
Chances are the property was mortgaged. Simply transferring title does not relieve the party, who transferred his or her interest of the obligation to make mortgage payments. If the original mortgage was in both names, both parties will remain liable on the mortgage.
If there is a default in making mortgage payments, the bank could try to collect from either or both parties. The default would be reported to the credit agencies and hurt both parties’ credit scores. The only way to prevent this from occurring is to require the spouse retaining title to the property to refinance the mortgage in his/her sole name. For this to happen, that party must qualify for the mortgage.
Not only is the spouse who transferred title at risk for a possible default on the mortgage, but until he/she is off the mortgage, he/she may have limited credit to purchase a new home.
When I represent the spouse transferring title, I advocate that if the other party has not applied for and obtained a new mortgage within a defined reasonable time, the property should be sold.
