Volume 12 Number 1

 

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Title Tips by Tute

Volume 12, Number 1
(Spring 2006)

 

Dear Tute:

I was wondering if you could clear something up for me. I am having some confusion over who should sign the deed of trust in the following scenario:

Adam and Eve Smith are husband and wife. Adam is the CEO of a local company and Eve is a stay at home mom. The title to their home is vested in Eve's name only. They have decided to refinance their property. The mortgage will be in both names as Adam makes all the money and Eve is sole owner of the collateral.

The settlement attorney's office has taken the position that Adam can't be included on the deed of trust because he is not on title.  (Is this really a rule?!?) Even though Adam does not hold title, doesn't he still have some dower rights with regard to the property? Should he be included on the deed of trust in order to convey those rights? Or does that not effect the lenders lien against the property? Further, if he did sign the deed of trust, wouldn't he just be signing over his interest in the property and if that is zero, then what is the harm?  I am just not sure I understand the issue here.  Is there some reason that I am missing why he could not or should not sign the deed of trust?

Thanks for helping me understand.

                                                                        Marion Ravenwood

 

Dear Marion:

The easy answer is that both "should" sign the deed of trust.

Eve must sign the deed of trust, as she is the owner of record.  Adam's spousal interest (no longer dower in Virginia, but the augmented estate) should be relinquished in writing in favor of the lender, and what better way than by signing the deed of trust?  It is not required, however, as the lenders tweaked the augmented estate statute to automatically define financial institutions making loans as a bona fide purchaser for value.

Historically, a stay at home spouse would sign the deed of trust to release their dower interest, and there would be an explicit statement that their signature was without liability for the note.  There are federal EEOC considerations here as well, as lenders got beat up by the federal regulators for requiring both spouses to sign the note when only one spouse qualified for the loan.  The lending regulations and the real estate rules collide, and as in most fender benders, no one is happy.

If Adam is the borrower, he "must" sign the note.  Many computer programs used to generate loan packages don't realize that the borrower and the owner may not be the same person, and default to a signature block in both the note and deed of trust which are identical . . . which may be an error in your situation.

The easy solution, as I suggested at the beginning, is for Adam to sign both the note and the deed of trust, explicitly noting in the deed of trust that he is the sole obligor under the note; and Eve to sign only the deed of trust explicitly noting that she has no liability for repayment of the note, that she signs only to encumber the real estate.

In this way neither is responsible for an obligation to which they didn't agree, all the potential interests in the real estate are accounted for, and the relationship of Adam and Eve as husband and wife appears in the land records (which might otherwise appear to disclose to a title examiner that she was unmarried or no longer married).

Clear as mud?

                                                                                             Tute

Dear Tute:

I have the following lien on title:

Mortgage from A to B & T, dated 03/31/67, recorded 04/24/67, in Mortgage Book Volume 2879, Page 471, Fairfax County, securing the principal sum of $2,469.00; closed end mortgage.


A is the previous owner of the property.  In the body of the Deed of Trust it states that it was only for a 5 year term.  Is it ok to remove this or what do I need to do?

                                                                            Mae Mordabito

Dear Mae:

There is a statute of limitations for actions seeking to enforce the lien of a deed of trust.  Where the maturity date is stated, the deed of trust cannot be enforced after 20 years have passed (unless the lender filed some sort of modification extending the maturity date). Your instrument was dated in 1967, and stated it matured in 1972.  Add 20 years to the maturity date, and you should reach the result that this lien would be unenforceable after 1992.

    § 8.01-241. Limitation of enforcement of deeds of trust, mortgages and liens for unpaid purchase money. — No deed of trust or mortgage heretofore or hereafter given to secure the payment of money, and no lien heretofore or hereafter reserved to secure the payment of unpaid purchase money, shall be enforced after twenty years from the time when the original obligation last maturing thereby secured shall have become due and payable according to its terms and without regard to any provision for the acceleration of such date; provided that the period of one year from the death of any party in interest shall be excluded from the computation of time. The limitations prescribed by this section may be extended by the recordation of a certificate in the form provided in § 8.01-241.1 prior to the expiration of the limitation period prescribed herein in the clerk's office in which such lien is recorded and executed either by the party in whom the beneficial title to the property so encumbered is vested at the time of such recordation or by his duly authorized attorney-in-fact, or agent. Recordation of the certificate shall extend the limitations of the right to enforce the lien for twenty years from the date of the recordation of the certificate. The clerk of the court shall index the certificate in both names in the index of the deed book and give reference to the book and page in which the original writing is recorded. Unless the deed or deeds executed pursuant to the foreclosure of any mortgage or to the execution of or sale under any deed of trust is recorded in the county or city where the land is situated within one year after the time the right to enforce the mortgage or deed of trust shall have expired as hereinabove provided, such deed or deeds shall be void as to all purchasers for valuable consideration without notice and lien creditors who make any purchase of or acquire any lien on the land conveyed by any such deed prior to the time such deed is so recorded.


Thanks for the softball.

                                                                                             Tute

 

 

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