One Spouse on Title but Both on Mortgage in Divorce in New York City

Sometimes, both spouses are on the mortgage, but only one spouse’s name is on the title. The outcomes in divorce are different depending whether the spouses reside in an equitable distribution state such as New York or Florida or in a community property state such as Texas and California.

When a married couple divorces, the spouses either agree or the court makes a decision on a property settlement.

Equitable distribution state. In an equitable distribution state, such as New York or Florida, this means that only the spouse on the title owns the property during marriage. In case the spouses do not agree on how to divide their property in divorce, the court may not necessarily divide it equally but equitably in a way that is fair, based on a set of factors such as how much and what each spouse contributed to the marriage and what each spouse will need to move forward with the divorce.

Community property state. In a community property state, such as California or Texas, all property acquired during marriage is presumed to be community property, regardless of whose name is on the title. At divorce, community property is divided equally. So if the house was bought during marriage, it would be sold and the proceeds divided equally. And if the house is separate property (bought before marriage, with separate property funds or given as a gift or inheritance during marriage), then it will go to the spouse whose name is on the title.

When both spouses are co-borrowers on the mortgage, the spouses have the following options in the event of a divorce:

Sell the real property and satisfy the mortgage

The easiest and the most common way to handle real property in a divorce is to sell the property, use the proceeds of that property to pay off the mortgage debt, and split the remaining equity among the spouses. This allows the spouses to start anew with their lives. However, when only one spouse is on the title, that spouse may object to sharing the proceeds with the other spouse.

Refinance the mortgage without selling the real property

Another way to handle real property in a divorce when both spouses’ names are on the mortgage is to remove one spouse’s name on the mortgage with the lender’s consent through refinancing. In this case, however, the spouse who refinances the mortgage must pass the lender’s eligibility requirements. The lender will look into that spouse’s income, debts, assets, and credit score. Based on these factors, the lender may or may not agree to a refinancing of the mortgage, may require the spouse to come up with a larger down payment, or may ask the spouse to have another person co-sign the loan as a guarantor.

One spouse stays on the property, both names are still on the mortgage

When refinancing is not an option, it sometimes happens that one spouse stays on the property (usually with the children, or maybe the one whose name is on the title, etc), but both spouses’ names are still on the mortgage. The spouses may still share the responsibility of paying the mortgage, or just one spouse pays, or one spouse pays more than the other, depending on their agreement or court order.

How does it happen that both spouses’ names are on the mortgage, but only one spouse’s name is on the title

This rare instance sometimes happens when one spouse purchases the property solely but asks the other spouse to co-sign or act as a guarantor. The other spouse who co-signs as guarantor is usually not primarily liable for the mortgage payment and only becomes liable when the primary borrower, the other spouse, fails to pay.

If the other spouse signs, not as a guarantor but, as a co-borrower, this is a disadvantageous situation for the spouse whose name is on the mortgage as a co-borrower, but whose name is not on the title. Here, both spouses are primarily liable and have the shared responsibility to make the mortgage payments. Yet only one spouse owns the real property. This means that spouse who owns the property can sell the house without the other spouse’s consent, signature, or approval.

If you are in this situation, you can rectify it immediately by asking your spouse to execute a quitclaim deed, transferring ownership interest to both of you. If your spouse refuses and your divorce, you may contest your spouse’s ownership interest, despite the title showing only one spouse as the owner, by presenting to the court evidence that you financially contributed to the mortgage payments, down payments, and real property taxes, or home improvements.

To avoid expensive litigation, however, it is advisable that both spouses include their names already on the title.

Title vs. mortgage

The title reflects ownership interest over real property. It is evidenced by a deed conveying ownership from one person to another. This title deed is recorded with the county recorder or city register in order to be effective against third persons. Once the title deed is recorded, the public is put on notice that you are the new owner of the real property.

Unless you buy the real property in cash, you will need a mortgage to purchase it. A mortgage is an agreement between a lender and a borrower, where the lender lends money with interest to the borrower to purchase real property. As security for the loan, the property being purchased is offered as collateral on the mortgage. If the borrower fails to pay, or defaults on, the loan, the mortgage can be foreclosed, allowing the lender to recover the unpaid debt by taking ownership of the mortgaged property and selling it.

This mortgage is also recorded as a lien on the property with the county recorder or city register. The record of the mortgage on the title puts the public into notice that anyone who buys the property purchases it, subject to the mortgage.

Marital vs. Separate Property: The First Question a New York Court Asks

Before a New York court divides real estate in a divorce, it has to classify the property under Domestic Relations Law (DRL) § 236(B). Title is one piece of evidence, but it is not the end of the analysis. The categories are:

• Marital property. Anything acquired during the marriage, regardless of how title is held, with limited exceptions. A house purchased after the wedding using marital earnings is presumptively marital even if only one spouse signed the deed.
• Separate property. Property acquired before the marriage, received by gift from a third party, or inherited; the proceeds of separate property; and personal injury compensation. Separate property remains separate unless it is commingled or transmuted into marital property.

A house held in one spouse's name only can still be entirely marital — for example, if it was bought after the wedding with marital income. Conversely, a house held jointly can have a separate-property component — for example, if one spouse used premarital savings for the down payment and can trace the funds. This classification analysis often matters more than the literal title.

Equitable Credits When Title Is in One Name

Even when title is in one spouse's name, the non-titled spouse who contributed to the mortgage, property taxes, insurance, or capital improvements may be entitled to equitable credits. New York courts routinely consider:

• Direct payments toward the principal balance of the mortgage from marital income.
• Payments toward real estate taxes and homeowner's insurance.
• Documented capital improvements that increased the value of the home — kitchen renovations, roof replacement, additions.
• Reductions in mortgage principal during the marriage that increased the parties' equity.
• Any appreciation in value that can be attributed to active marital efforts (renovation, sweat equity) as opposed to passive market appreciation.

The non-titled spouse who is on the mortgage has an especially strong argument because that spouse's credit was pledged to support the loan and remains exposed if the titled spouse defaults.

Practical Problems With "Both on Mortgage, One on Title"

This split arrangement creates predictable problems during and after a divorce:

• Credit exposure. Both spouses remain jointly and severally liable for the loan. A missed payment hurts both credit reports.
• Refinancing eligibility. The titled spouse may struggle to refinance into a single name if their income alone does not support the loan. Without refinancing, the non-titled spouse remains a borrower on a property they do not own.
• Sale and transfer barriers. The titled spouse can list and sell the property without the other spouse's consent, but cannot deliver clean title at closing unless the existing mortgage is paid off — which usually requires the non-titled co-borrower to sign payoff documents.
• Tax deductions. The IRS generally allows the deduction for mortgage interest only to the person who is both legally liable and who actually paid the interest. Disputes about who claimed what in past tax years can resurface in divorce.
• Estate complications. If the titled spouse dies during the divorce, the property passes through that spouse's estate. The non-titled co-borrower may have no inheritance right and still be on the hook for the loan.

Documents to Gather Before You Negotiate

• The deed and the recorded copy from the county clerk or city register.
• The current mortgage note and any modification agreements.
• The original closing statement (HUD-1 or Closing Disclosure) showing the source of the down payment.
• Recent mortgage statements showing principal, interest, taxes, and insurance.
• Bank statements demonstrating who paid the mortgage and from what accounts.
• Receipts and invoices for renovations and major repairs.
• A recent appraisal or comparative market analysis, ideally from a neutral source.

Frequently Asked Questions

Can my spouse sell the house if my name is only on the mortgage?

The titled spouse can list and contract to sell, but a sale that affects marital property during a pending divorce can be blocked by automatic orders that go into effect when a New York divorce is filed. Even without those orders, a non-titled spouse can record a notice of pendency or seek injunctive relief to prevent a transfer that would prejudice their equitable distribution claim.

Should I sign a quitclaim deed to get my name off?

Almost never without legal advice. A quitclaim deed transfers your ownership interest but does not remove you from the mortgage. You can end up with no equity and continuing liability — the worst of both worlds.

What if my spouse cannot qualify to refinance?

Common solutions include: selling the house, an assumption of the mortgage if the lender allows, an indemnification provision in the divorce settlement protecting the non-occupant spouse, and a deadline by which the occupying spouse must either refinance or sell. None of these is perfect, and each requires careful drafting.

When only one spouse’s name is on the mortgage but both are on the title and there is a dispute regarding each spouse’s equity in the property, you need to be represented by a lawyer when negotiating with the other spouse in the event of divorce. If you need to rectify a mistake where both spouses are on the mortgage but only one spouse is on the title, consult with a lawyer to prepare a quitclaim deed which should be recorded in the county register. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].