UNDERWRITER CORNER: REQUIRED SIGNATURES WHEN HUSBAND AND WIFE BOTH OWN PROPERTY

UNDERWRITER CORNER 

REQUIRED SIGNATURES WHEN HUSBAND AND WIFE BOTH OWN PROPERTY

Recently, Chris and I have been dealing with the same issues on several claims from Missouri and Minnesota regarding married couples.  Both fact patterns illustrate the type of common issues that can pop-up because of a disconnect between all of the parties leading-up to closing.

The first fact pattern deals with a husband and wife buying property.  Only one spouse is listed on the purchase agreement and the mortgage, but for some reason, the deed ends up with both spouses listed as the new owners.  What needs to happen:

• Both spouses are now going to have to sign the mortgage, no matter what.
• This is because they are now going to be co-owners, so a non-homestead recital is not enough to properly encumber this property.
• The bank needs to know about this change so that they can properly address it.  Do not assume that just adding a spot for the other spouse to sign the mortgage at the end is going to be enough.  An entirely new person is coming into legal ownership of the property.  
• Title commitment / policy will need to be updated to reflect both husband and wife as the new owners of the property.

We often think and are concerned with the homestead issue when we see husband and wife, which is an important consideration.  The real issue with the above fact pattern is the fact that another person is in legal title to the property.  Imagine instead of husband and wife, it is just a single person (Eric) listed on the purchase agreement and the mortgage, but suddenly at closing another person (Chris) appears on the deed too.  To properly encumber the property, the mortgage needs both Eric and Chris to sign-off on it - because they are each the owner of the property.  

The second fact pattern deals with husband and wife already owning the property.  Both of them are listed on the original vesting deed.  Now the property is going to be sold, and only one of them is listed as the grantor.  What needs to happen:

• Both spouses are going to have to join-in the conveying deed, no matter what.
• This is because they are both the owners of the property.  This is not the case where it is non-homestead property that only one spouse owned in their own name.  
• Imagine again that instead of husband and wife, that it was two co-owners, Eric and Chris.  For the entire property to be conveyed free and clear of the other person's interest, both owners have to sign the deed as grantors.  The same applies when both husband and wife are co-owners of the property.
• Having only one spouse listed as the grantor may not sufficiently convey clear title to the new grantee, even if the other spouse signs the deed.  
• While the answer for homestead issues is always have the other spouse sign the instrument (deed, mortgage, ect.), there signature alone, with no reference to them as grantor, may or may not convey their legal interest in the property.  At a minimum, it creates a potential issue and cloud on title, which we always want to avoid.  

Conclusion 

The biggest takeaway is that there can be other issues present, aside from homestead concerns, when married couples are buying, selling, and mortgaging property.  Always check the purchase agreement, title commitment, deed, and mortgage to see if everything lines up.  If something is different, then really analyze the situation to see what is going on.  Do not assume that the only concern is homestead issues.  Having the other spouse sign the document or the inclusion a non-homestead recital might not be enough to fix the real issue.  You can always contact either Chris or myself for guidance.