Presentation on theme: "WHAT THESE MATERIALS ARE NOT:"— Presentation transcript:
1 Marital Rights: Clarification on the Requirements for a Spouse’s Signature
2 WHAT THESE MATERIALS ARE NOT: They are not intended to explain what marital rights are. It is enough to accept that “marital rights” exist in Missouri and that the failure to effectively deal with the existence of such rights in connection with a real estate transaction can result in an unmarketable title.
3 WHAT THESE MATERIALS ARE NOT: They are not intended to advocate the use of marital waivers or consents. In fact, the use of such documents is a customer convenience only. It is always acceptable to require that both spouses execute all deeds, deeds of trust, easements, leases, plats, installment contracts and such other documents as may directly affect the title to an interest in real estate.
4 WHAT THESE MATERIALS ARE NOT: They do not represent universal truths when it comes to underwriting standards established by title insurance companies. Underwriting positions may – and probably do – vary from underwriter to underwriter. This is particularly true in regard to homestead issues. Positions may vary based on the circumstances of the specific transaction also. Always confirm with the specific underwriter before launching into a course of action.
5 Types of SpousesThere are only two types of spouses: titled spouses and non-titled spouses.All spouses (titled and non-titled) must sign something in real estate transactions.
6 Titled SpousesTitled Spouses: cannot waive their ownership interest, but instead must sign all instruments affecting the title OR convert themselves into non-titled spouses.
7 Non Titled SpousesNon-titled Spouses: may waive marital rights and/or consent to transactions by the other spouse alone OR can join on instruments affecting the title, but they must sign something
8 Purchase Money Deeds of Trust Purchase money deeds of trust where title is to be taken by one spouse alone under a purchase contract identifying that spouse as the only purchaser may be executed by the purchasing spouse alone and the non-buying spouse need not sign anything; provided, however, purchase money deeds of trust with future advance provisions should not be treated as “purchase money” and the non-buying spouse will either have to sign a waiver or join on the deed of trust.
9 Missouri Is Not a Community Property State! Missouri is not a community property state. “Community property” does not exist here, and the requirement that a spouse sign neither creates community property nor acknowledges in any way that the property is community property. Nor do community property issues affect the necessity of requiring a spouse’s signature. The fact that the property would not be community property under the law of California or New Mexico or Nevada or Texas or any other state has nothing to do with whether a spouse in Missouri must sign a document.
10 Pre Nuptial Agreements Ante-Nuptial or Pre-Nuptial Agreements or Post-Nuptial Agreements authorizing either spouse to deal with real property without the consent or joinder of the other spouse are not accepted by most major underwriters for purposes of overcoming a requirement that a spouse join on a deed or mortgage or deed of trust or other document.
11 Interests In Real Property Any interest in real property is subject to the guidelines regarding spouses’ signatures. Deeds or deeds of trust are all generally recognized as creating an issue as to marital status and the potential need for a spouse’s signature, but so too do easements, leases, installment contracts/contracts for deed and any other conveyance or grant of an interest in real property.
12 Non Consensual LiensSpouses who are not also owners of an interest in the real property cannot subject that property to non-consensual liens. Therefore judgment liens or state and federal tax liens against the non-titled spouse alone do not attach to property (or any interest therein) owned by the other spouse in his or her name alone.This should not be confused with the Missouri situation where federal tax liens against one spouse alone now attach to property titled in both spouse’s names. That change in federal law does not create a lien where the spouse against whom the lien is filed is NOT in title.
13 HomesteadMissouri is a “homestead” states and has a homestead statute which is not generally well known. The concept exists in Missouri nonetheless.[i] RSMo As a general rule, when the inquiry is made as to whether Missouri is a homestead state, the real question being asked is: “Does a spouse need to sign?” The answer is invariably “yes,” although what the spouse has to sign may vary.“Either spouse separately shall be debarred from and incapable of selling, mortgaging or alienating the homestead…and every such sale, mortgage or alienation is hereby declared null and void….”
14 Titled SpousesThe titled spouse must sign…always...every time…no exceptions.As an “owner” they must convey their ownership interest or mortgage it or grant an easement over it or lease it to someone else, etc. They cannot consent to the other spouse doing it alone[ii].They cannot “waive” their ownership rights.
15 Tenancy By The Entirety In Missouri, if a husband and wife hold title as tenants by the entireties, neither alone may validly convey or mortgage the property.The signature of one alone on a document is totally ineffective to transfer or mortgage the title or create an insurable easement or grant a lease. Please do not confuse this with issues concerning a valid power of attorney or court-ordered sales or probate or incompetency proceedings, all of which are beyond the scope of this article.
16 Marital Rights WaiverAs an “owner” they must convey their ownership interest or mortgage it or grant an easement over it or lease it to someone else, etc. They cannot consent to the other spouse doing it aloneThey cannot “waive” their ownership rights.Such an option is NEVER acceptable under Missouri’s marital rights laws.While it may not be necessary for the non-borrowing, titled spouse to execute the loan application or the note or any other loan documents (this is a lender decision, not at title decision), the non-borrowing spouse who is in title must execute the deed of trust/mortgage before it is insurable
17 Converting to Non Titled Spouse Quit Claim DeedTitled Spouse is listed as “Married Person”Lender requirement, not title requirement.Judgments now attach!!!!
18 Non Titled Spouses“Marital rights” exist as to any Missouri real property owned by the other spouse, whether acquired before or after the marriage, and whether acquired by inheritance or gift or purchase or otherwise.
19 Non Titled Spouses and Signing Requiring the spouse, if any, of the seller/borrower to execute the deed or mortgage/deed of trust is always an acceptable practice.Marital Waiver is also acceptable if transaction specific
20 RecordingThe waiver or consent must be an original, in writing, executed by the non-titled spouse, and duly acknowledged and recorded.It should be recorded immediately before the document to which consent is being given.
21 The DocumentWhen preparing a marital waiver, the cover page should show the titled spouse as the “Grantor” (even though the titled spouse is clearly NOT the grantor) to assure the document is correctly indexed in the grantor/grantee index. The buyer or lender could appropriately appear as “Grantee.”
22 Purchase Money Deeds of Trust In Missouri only that part of the loan being used to acquire the property (or pay closing costs) qualifies as “purchase money.The deed of trust is also not a “purchase money” security instrument where the loan is being made to pay off a pre-existing installment contract or contract for deed.
23 Purchase Money Deeds of Trust Where both spouses are purchasing the property and will both be identified as grantees on the deed, both spouses must execute the purchase money deed of trust.Where only one spouse is taking title, the other spouse may be treated as a non-titled spouse, and may execute a consent or waiver.
24 Purchase Money Deeds of Trust The status of a purchase money mortgage is unique in that without the funds to pay for the title the borrower would never own the title to begin with. If the borrower did not own the title, other “secured” creditors, whose liens might pre-date the purchase money lien, would have no asset at all from which to collect.
25 Purchase Money Deeds of Trust At common law, unaffected by statute, purchase money mortgages are afforded super-priority—they become senior to liens which were in existence ahead of them but would have had nothing to attach to but for the loan of the purchase money
26 Future Advance Deeds of Trust/Revolving Credit Loans While the initial advance at closing is undoubtedly purchase money, subsequent advances have nothing to do with acquiring the title to the property.Subsequent advances may very well be subject to the marital rights of the non-titled spouse.
27 Future Advance Deeds of Trust/Revolving Credit Loans Non-titled spouses must either consent to or execute a purchase money deed of trust that contains future advance provisions is far and away the safest course of action to follow.