Mar 12, 2018

Marital Status in Real Estate

Your friendly title company representative wants to know if you’re married. How flattering, right? Not exactly. Asking about your marital status isn’t a come-on or a pick-up line. At least not when it comes to a real estate sale.
When someone in a real estate transaction – either the buyer or seller – has been married, is getting married, is separated, is divorced, or is in any past or present state of marriage, it can affect the sale of a property. Well, sure, it can affect your mental state, too. But it also affects the sale process in other ways.
When married and selling a property, both spouses are typically required to sign closing documents. This applies even if the property is in the name of only one married seller or was owned by only one spouse before marriage.
Texas laws focus on protecting the homestead rights in a marriage. Basically, our governing forefathers wanted to ensure that one spouse didn’t sell the family homestead without the knowledge of the other spouse. And if the property isn’t the couple’s homestead, the spouse would need to sign a non-homestead affidavit before the sale. They want to safeguard a spouse’s rights to their home. Seems fair in my non-legal opinion.
Also, because Texas is a community property state, our laws presume that real estate is community property during a marriage. The title company wants to make sure the spouse doesn’t have other rights to the real estate. When the seller is married, there typically isn’t a big issue with getting a spouse to sign paperwork. They just come to the closing together.
But often sellers don’t realize how important it is. Failure to disclose that you’re married can cause delays in the closing process. Additional documents may need to be drawn and some paperwork may need to be changed or updated.
Realtor Rob Schrickel with Ebby Halliday recently attended a closing where his seller casually mention that the wife was packing. While he knew the seller had a partner, he didn’t know that they had gotten married. Schrickel recalled the awkward moment when the escrow officer paused and asked, “What? You’re married?”.

When that happens, the screeching noise you may hear is the sound of the brakes bringing your closing to an abrupt halt. These kinds of surprises regarding marital status inevitably cause delays and could lead to litigation. “Fortunately, we were able to reach the wife and she was able to come in and sign some documents pretty quickly,” says Schrickel. “It turned out okay and we ended up closing on the sale.”

But it isn’t always that easy. Especially in those sticky situations where an estranged spouse or ex-spouse needs to sign documents in order to complete the sale. Property ownership isn’t always tied up in a neat bow even when people legally divorce. Release of liens aren’t always recorded and deeds aren’t always updated properly. 
The title company handling the sale will want to review the divorce decree or settlement agreement that has been issued by the court. They aren’t being nosy and don’t care about who go what except where it comes to the property. If they don’t have proper documentation that awards the property to one party, then an ex-spouse might be asked to sign paperwork in order to sell. If the divorce is still pending, both parties must sign the closing documents. That’s never any fun.
When buying a home, marital status isn’t as complicated, but it can still matter. Just one spouse can purchase a property. However, if you’re getting a mortgage, your lender may require your non-borrowing spouse to also sign some documents.
If you’re purchasing a property while going through a divorce that isn’t yet finalized, talk with an attorney. Run, don’t walk, to a real estate or divorce attorney for advice on how to proceed while protecting your future home — unless you want to deal with your ex when you sell some day.
If your marital status has changed in any way since you first purchased a property, always be prepared to provide documentation of ownership before selling.
The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.
[where: 75230]

Feb 14, 2018

Deed vs Title

Deeds and titles go together like love and marriage. But like love and marriage, they aren’t the same thing.
A deed is not a title and a title is not a deed.
Though they seem alike, deeds and titles serve different purposes. And in the real estate world, the references to them can be confusing.

What is a Deed?

When you buy or sell a home, one of the documents that you sign at closing is the deed for your property. A deed is used specifically for the transfer of real estate. It sets forth your right to claim ownership of the property. A deed must always be in writing, correctly executed, and recorded in land records. The deed lists the address, legal description, the parties transferring the property, etc. The deed may also contain items like the sales price, restrictions regarding use of the property, etc.

There are several different types of deeds and each relates to something specific regarding use of a property and in establishing legal ownership of a property. A few different types of deeds include:
A General Warranty Deed is where the seller warrants that the title is free and clear of any encumbrances and that they have the right to transfer title. With a Special Warranty Deed, the seller warrants that the title is free and clear only for the time that the seller has had the title.

A Deed of Trust typically references a mortgage. This document allows the lender or lienholder remedies if the borrower defaults in their payments to the lienholder. Despite the use of the word “deed,” this is not proof of clear ownership or title. Basically, this deed often contains a clause that gives the trustee (your lender) the right to act (foreclosure) if you default. Your lender still “holds the title” of your home until you’ve paid off your loan.

Deeds are used solely for the transfer of real estate. But it takes more than a deed with the new owner name to transfer a piece of real estate. Just because you received a deed, doesn’t mean the property is free and clear of other claims. It can be very complicated. For this process, most buyers and sellers use a title company as a third-party agent to convey both deed and title.

What is a Title?

Transferring title to real estate does not work in the same way as transferring title to an automobile. You can’t just hand a certificate of title over to a buyer, take their check and consider it transferred. While a deed tracks the legal ownership of the property, a certificate of title is the legal document that establishes full-and-clear rights to the property.

Generally, the certificate of title proves ownership of property. It will contain the property owner’s name and address, and identifying features of the property. In the most basic terms, a deed is required to change the ownership of a property. A “title” is a concept that describes who ultimately owns the property.

For example, when you pay off your mortgage, the lender files a release with either the court or a local authority where the property is located. After all liens and encumbrances are off a property, then the owner has ‘clear title.’

You can think of the title as the legal relationship between persons and property. It gives ownership rights that no one else can claim and it allows the owner to possess and dispose of the property. To make it even more complicated, there are a few different types of title. For example, tenancy is where each person on the title owns interest in the property. A tenant can sell only their interest in the property, but not the entire property.

If you want to know more details about deeds or titles, ask a real estate attorney or your favorite escrow officer. Both deeds and certificates of title provide some proof of ownership. Like love and marriage, they go hand in hand.   [where: 75230]
The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.

Feb 2, 2018

Texas homestead rights

We Texans cherish our homestead rights more than anyone. And we’ve got the state constitution to prove it.
Cue the old west music and picture Ma with a baby on her hip and Pa with his rifle at the door of their simple home. That must be what the Texas founding fathers had in mind when they enacted our state’s constitution and property code to help protect our citizens.

Texas homestead protection laws help prevent Texans from becoming homeless if they are in a financial bind. “Our history has valued the homestead concept,” says Britt Fair, president of Fair Texas Title. “It’s protected more heavily here and therefore your run of the mill debts can’t cause you to lose your homestead.”

Texas homestead rights were designed to keep creditors from taking your home and kick you to the curb. Unlike places like Pennsylvania or New Jersey, in Texas, standard creditors can’t seize your homestead. For example, if you owe money on a student loan, credit card, or similar debt, the company can’t force the sale of your home. Because Texans are fortunate to have one of the most protective homestead provisions in the country.

The definition of a Texas homestead and homestead rights are set out in the state constitution. Found in the Texas Constitution article XVI, section 50 and Property Code chapters 41 and 42 to be exact.
While the homestead has always been sacrosanct in Texas, there are exceptions. A mortgage holder or taxing authority may force the sale of a home. If you don’t pay your mortgage, your lender can foreclose and take back the property. You have to ‘pay to stay.’ The IRS is another exception. Uncle Sam can take your property to satisfy tax debt. Texas courts also don’t tend to give homestead protection to protect criminal conduct.

There are a whole bunch of legal restrictions, exemptions, and definitions, but basically a homestead is a primary residence owned and lived in by a family or single adult. You can only have one homestead entitled to be exempt from seizure by claims of creditors. Any transfer of a homestead property must be done by both spouses if you’re married.

The legal description of a homestead in Texas, and what makes it exempt from creditors, is long and detailed. For specifics and guidance on Texas homestead laws and rights, consult a real estate attorney, tax advisor, or someone who can offer legal advice (which is not me). Most of us won’t ever need the legal homestead protections granted to Texans, but we’re happy to have them just the same.

“As strong supporter of homeowner’s rights, and I’m proud that Texas recognizes the importance of a person’s homestead,” says Fair. The folks at home on the range would agree.
[where: 75230]