Understand the nuances of quitclaims and community property laws to ensure smooth and secure property transfers.
In Washington, a quitclaim deed transfers a property interest without any guarantees. Since Washington is a community property state, both spouses typically share ownership of property acquired during marriage—This means each spouse usually has an interest, even if only one name appears on the title. In these circumstances, quitclaim deeds can be an effective tool for separating interests of spouses for individual purchases, estate planning, divorce, and other reasons. Community property agreements are another great tool, particularly in the estate planning context. This article focuses on subtle, often unwritten, implications of owning property as a married couple, or domestic partnership, in Washington state.
One implication of being in a community property state is that there is a presumption real estate acquired during a marriage belongs to the marriage as community property, not as separate property of each spouse. Both spouses share management and control of the community property. Homestead law, intended to protect a primary residence, extends this protection to include marital homes, regardless of whose names are on the deed, which means both spouses may be required to sign.
Each community property state is different. In Washington, the general rules are simple: Property acquired before the marriage is ‘separate,’ and property acquired during the marriage is ‘community.’ Diving a little deeper, these rules create rebuttable presumptions, which means the status is a legal default and any party asking a court to rule otherwise carries the burden of proving the property deviates from its presumed, default status. There are also some other carveouts for things like inheritance and gifts, which are presumed to be ‘separate.’ It is also possible for property to be converted from separate to community, or mixed.
Recalling the above, a quitclaim deed is a legal document used to transfer ownership interest in a property without guaranteeing a clear title. Because quitclaim deeds do not include any guarantees or warranties, they are relatively simple and inexpensive to prepare. For this reason, quitclaims are often used between family members, in divorce settlements, or to correct other title defects when warranties are not required. Another common example will be when one spouse attempts to take out a mortgage in their own personal name—The lender in these circumstances will often require the other spouse to execute a quitclaim transferring their half interest to the mortgaging spouse so that the lender can use the full value of the property as collateral.
Homestead laws protect homeowners from losing their primary residence to creditors by allowing them to declare a portion of their real and personal property as a homestead. Once declared, this property is generally exempt from most creditors, even in bankruptcy. In Washington, the homestead exemption is capped at $125,000. These protections also extend to spouses or domestic partners who share a primary residence. For transactions involving the primary home, both spouses must consent, even if only one is listed on the title. In cases of separation or divorce, one spouse may need to transfer their interest via a quitclaim deed before selling the property to a third party.
While community property sounds nice on paper, the reality is it introduces a lot of added complexity to real estate transactions for married couples and domestic partners. If you need help with a transaction involving community property, contact Cascade Counsel to schedule a consultation—We can help!