Douglas A. Turner, P.C.

Over the years, our office has dealt with many legal problems caused by misunderstandings about the law. For the benefit of all, a few of those misconceptions are listed below. Read on and test your legal skills!

A General power of attorney does not survive death.

A general, financial power of attorney is a document that designates another (an “agent”) who can make decisions regarding an individual’s finances (the “principal”). This includes the ability to sell real estate, pay bills and withdraw money from a bank account. Many people believe that a general, financial power of attorney allows the agent to continue handling the principal’s finances after death. This is not true. A power of attorney ceases to be effective upon the death of the principal. A real estate deed executed pursuant to a power of attorney after the death of the principal does not pass marketable title. A withdrawal of money from a bank account after the death of the account holder is a serious breach of the agent’s duties.

In Colorado, real property held by a married couple does not automatically pass to the survivor upon the death of the first spouse.

There are many types of co-tenancies. Not all result in the property passing to the survivor upon death. In Colorado, there is no magic about a spouse as a co-tenant. Nor does the passage of time vest ownership in the surviving co-tenant. Only property held as joint tenants with right of survivorship automatically passes to the survivor upon death. Even then, certain documents must be recorded or presented in order to document the transfer. In the case of real estate, this little misconception can easily cost thousands many years after the spouse’s death.

There is no such thing as a Quick Claim Deed.

It is called a quitclaim deed. Not a quick claim deed. Not a quit claim deed. But a quitclaim deed. It is called a quitclaim deed because the person making the transfer to the new owner simply quits his or her claim to the property without making any representation that the transferor owns anything. The transferor makes no guarantees about having good, indefeasible or marketable title. The transferor is simply stating “whatever I have I am giving to you, and nothing more.” The term quick claim deed came about through a misconception about the need for legal advice. Many people believe that if they use a quick claim deed, they do not need a lawyer and can make the transfer quickly. Lawyers make thousands of dollars every year fixing title problems caused by botched “quick” claim deeds.

A divorce does not release a person from liability on existing debts.

When a judge grants a divorce and orders the respective ex-spouses to pay specific debts, this does not release either spouse from liability for the debt. In general, a judge cannot alter the rights of a non-party to a proceeding. The creditor is not a party to the divorce proceeding. While the ex-spouse may be in violation of a court order and in big trouble, that does not equate to no liability for the debt.

The transfer of real estate to a new owner does not automatically relieve the transferor of liability to pay the mortgage.

Many people unable to pay their home mortgage are transferring the underlying real estate to a third party who promises to make the payments for them. When that third party defaults, the lender forecloses on the real property and sues the person who signed the loan for any deficiency. The fact that the person who signed the loan no longer owns the property does not control.

Bankruptcy does not terminate liability for all debts.

This issue comes up with timeshare interests. Many individuals who file for bankruptcy believe that the order discharging all debts relieves the individual from all liabilities, both current and future. In the case of a timeshare interest, the existing debt may be extinguished. However, unless the timeshare interest is surrendered as part of the bankruptcy, assessments accruing after the bankruptcy are not extinguished. In many cases, the timeshare interest is listed on a schedule of assets to be surrendered, but no surrender actually occurs. The surrender of a timeshare interest usually requires the execution of a deed.