Refinancing and Free Trader Agreements


#1

My wife is wanting to refinance her house while we are separated and most likely going to get a divorce. She needs me to sign a free trader agreement so she can refinance the house she’s living in that she bought a couple of months before we got married. We are currently selling the house that I’m living in.

If I sign the free trader agreement, will that mean that I sign away all claims to the equity I’ve also helped establish in the house she’s trying to refinance that she bought before the marriage?


#2

To add to that question, if I signed a quit claim deed on the house we both owned, would it remove me from any claim to built up equity in the house? This is in addition to the free trader agreement. Would one of the two (or both) help her out so she could renegotiate, but still allow me to potentially get back the equity or not?


#3

If I were you, I would immediately retain an attorney to assist you in negotiating with your spouse. The free trader agreement is so she can refinance your home and preumably repay you your share of the equity, an amount that we’ve agreed upon in the separation agreement. The separation agreement should include the language she believes she needs in the free trader agreement. The separation agreement should act as a free trader agreement. I would not sign anything additional at this time.

Until you have divided all of your property and debts, you should not be signing any kind of deed (what she was referring to is actually called a Quit Claim Deed). Further, signing over the deed to your wife does not absolve you of your responsibility under the mortgage. Your mortgage is a separate contract with your lender to repay that loan. The mortgage or Deed of Trust as it is called in NC, is a totally different document and obligation from the deed on your house. In order to get you off the mortgage, your wife would have to refinance the mortgage into her own name. At that time, you could sign over the deed to the house to her, and be totally removed from any obligation or liability on the house. But, be sure you have gotten your 1/2 of the equity, if there is any, before you complete those tasks. Don’t sign anything until you have an agreement that allows for your repayment of the equity from the re-finance. And, don’t sign the quit claim deed until you’ve received your equity from her.


#4

We haven’t agreed upon who gets what as far as equity and such not are concerned. I’m just not wanting her to make sure that I don’t have the ability to request my share of the equity in the house if I sign a document like the Quit Claim Deed.

She’s insisting that to finalize the refinancing of her house, she needs me to sign the Quit Claim Deed within a couple of weeks for the refinance to go through—I just want to make sure that options are left open and that I’m not shooting myself in the foot by signing anything before I get a chance to get a lawyer or we mediate the separation papers.

If the separation papers would still allow me the ability (if I choose to pursue it) after signing the Free Trader and the Quit Claim Deed to request my half of the equity in the house, then I’ll gladly sign them. But, it that would then screw me over of any potential rights to it, that’s what I’m wondering about.

Thanks again for any and all insights you have been able to provide!


#5

When a mortgage is executed it requires the signing of a promissory note and a deed of trust which secures the mortgage companies interest in this property. If your name is on the deed then both parties need to sign the deed of trust. In some instances the mortgage company will not remove you from the deed of trust in the future without another refinance.

If you are considering executing a quit claim deed, you should consult with an attorney before doing so. Your closing attorney should be able to prepare the deed. The attorney can hold the deed in trust and not record it until the refinance goes through. This might be a good option for you. This is common practice and your closing attorney should know about this process.

A quit claim deed transfers property between one party to another. I would not advise anyone to sign a quit claim deed if their name is still on the mortgage though. So, she may need to refinance the home in her sole name before you sign a deed.