Massachusetts Real Estate Attorney · Real Estate Law
After a divorce or breakup, or when a parent adds or removes a child, the first question is usually “How do I get their name off the deed?” The second question matters just as much: what happens to the mortgage?
The deed and the mortgage are separate
The deed shows who owns the home. The mortgage and promissory note show who owes the lender. A new deed recorded at the Registry of Deeds changes ownership. It doesn’t change who owes the loan.
So a person removed from the deed generally stays fully liable on the mortgage. They can be released only if the lender agrees or the loan is refinanced. For someone leaving a relationship, that can mean owning nothing but still owing everything.
Will the lender call the loan due?
Most mortgages have a “due-on-sale” clause. Federal law, the Garn–St Germain Act, bars lenders from enforcing it for certain transfers of a home with fewer than five units that the borrower lives in. These include transfers to a spouse under a divorce decree or separation agreement, and transfers where the borrower’s spouse or children become an owner. Other transfers may not be protected.
Options for the person leaving
- Refinance: The remaining owner takes out a new loan in their own name, and the old loan is paid off.
- Assumption: Some loans let the remaining owner assume the mortgage, with the lender’s approval.
- Release: Rarely, a lender will release one borrower without a refinance.
In a divorce, the separation agreement should say who refinances, by when, and what happens if they don’t.
Other things that change with the deed
- Homestead: A deed between spouses, former spouses or co-owners doesn’t end an existing homestead unless each of them signs an express release (G.L. c. 188, § 10). Still, after any ownership change, confirm the remaining owner’s homestead protection is in place.
- Title insurance: Ask whether the existing owner’s title insurance policy still covers the remaining owner.
- Taxes and benefits: A transfer for little or no money may be a gift for tax purposes, though gifts to a spouse generally aren’t taxable. It can also affect MassHealth eligibility: MassHealth looks back five years at transfers made for less than fair market value.
The tax and MassHealth information above is general information, not tax or benefits advice. Talk with an accountant or tax advisor, and an elder law attorney if MassHealth is a concern, before transferring property.
Our article on removing a name from a title or deed in Massachusetts explains how the new deed is drafted and recorded. To plan the full transfer, contact our office.
About the Author
Richard Alan Gaudet, Esq. is a Massachusetts attorney at the Law Offices of Richard Alan Gaudet, LLC in Middleton, Massachusetts, who advises clients on deeds, title transfers and real estate. His practice focuses on professional license defense, business law and litigation, family law, and landlord representation, serving clients across Northern, Eastern, and Central Massachusetts. Reach him at 978-273-8337 or rgaudet@gaudetlawoffice.com. Office: 35 Village Rd., Ste 100, Middleton, MA 01949.
ABOUT THIS ARTICLE
This article was prepared by a Massachusetts attorney and is provided solely for general informational and educational purposes directed to members of the general public. It does not constitute legal advice and does not create an attorney-client relationship. The law applicable to any particular situation depends on the specific facts and circumstances of that matter. Readers are encouraged to seek the advice of a licensed Massachusetts attorney before taking any action.
