What Is Title Insurance?
How Divorce Impacts Title and Title Insurance
Ownership transfer and recording requirements
“For a divorce decree to officially transfer title between spouses, it must include language that specifically grants the property to one spouse and divests the other spouse of any and all interest in the property. … The decree must contain the legal description of the property, not just the physical address.” Texas National Title+1
Title companies’ scrutiny of divorce decrees
“Title companies generally have certain requirements that must be met before the title to a property can be changed between divorced spouses.” Vanguard Title Company
Liens, judgments, and unaddressed spouse interests
“The spouse awarded the property … may have taken that interest subject to the lien against their ex-spouse — meaning the lien still applies to the property unless the remaining owner is able to get a partial release of lien.” Vanguard Title Company
Title insurance policy updates and owner’s protection
“Divorce, like marriage, significantly impacts property ownership and title insurance … Homeowners must take appropriate steps to update ownership records and insurance policies to reflect changes in ownership during or after a divorce.” Landtrust Title Services
Why Title Insurance Matters in Divorce
- Protecting future sales or refinancing. If ownership isn’t settled, the ex-spouse may claim interest, delaying or jeopardizing a sale or refinance. Title insurance that’s up-to-date helps ensure no surprise claims later.
- Clarity of ownership. Title insurance and proper recording ensure the spouse keeping the home has a clean title — vital for peace of mind and for legal, tax, and financial planning.
- Mitigating risk from hidden claims. For example, judgments against the ex-spouse could attach to the property. A current title insurance policy reduces exposure.
- Supporting the transfer process. Title insurance companies often verify that the divorce decree and recording meet their standards; that alone helps ensure the transfer is properly executed, avoiding future headaches.
Practical Steps for Couples (and Their Advisors)
- Review the divorce decree: Ensure it contains explicit language awarding the property to one spouse, divesting the other spouse, and includes the full legal description. Without this, title insurance may not accept the decree as a sufficient transfer. Texas National Title
- Record the appropriate deed: Even if the decree transfers ownership, many title companies recommend also recording a deed (such as a warranty or quit-claim) to remove ambiguity. rattikintitle.com+1
- Check for liens or judgments: Investigate whether the ex-spouse has judgments, tax liens, or other encumbrances that could attach to the property, and obtain releases or payoffs as needed. Vanguard Title Company+1
- Update title insurance policies: Contact the title insurer or your title company to inform them of the change in ownership, and determine whether a new owner’s policy or endorsement is needed. Landtrust Title Services
- Coordinate with your lender: If there is a mortgage, the staying spouse may need to refinance to release the other spouse. The lender will often require a clear title and a clean policy. Hello Divorce
- Timing matters: In many jurisdictions, the divorce decree must be final (i.e., no appeal pending) before title insurance can be issued. Expect delays if closing/selling/refinancing is planned around the date of entry of divorce. Texas National Title+1
Special Issues to Watch
- Purchase of new property during a pending divorce: If one spouse acquires property while still married, the property may be presumed marital, and both spouses’ names may need to be involved in the transaction. rattikintitle.com
- Co-ownership after divorce: Some couples may continue owning the home jointly (for instance, for the benefit of children). In such cases, the title insurance must reflect joint ownership and any special arrangements that may be in place.
- State-law differences: Property division rules (community property states vs. equitable distribution states) and local title recording practices vary, so local law affects how title insurance issues are handled. hugheslawgroup.com+1
- Future sale issues: If the retaining spouse fails to update the title and policies, a future buyer’s title insurer may require the flaw to be resolved, potentially resulting in further costs or delays.
Conclusion
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