John and Jane Dough just got married and put in an offer on a house, but John’s credit isn’t too hot. As it happens, Jane has good credit, so Jane plans to buy it in her name alone. But, the bank still wants him to sign as well.
Can’t it be her separate property?
The answer is yes – but that’s not the issue for the bank. Washington has two separate statutes dealing with who must sign a Deed of Trust – one deals with community property and the other applies to homestead property.
- Community property is acquired after marriage or after registration of a state registered domestic partnership and is jointly owned.
- A homestead is where the couple lives or intends to live and it’s automatic (RCW 6.13.040).
Jane can own the property as her separate estate and in that case John wouldn’t need to sign the Deed of Trust – unless it is or will be their homestead. That’s where the other statute comes into play. RCW 6.13.060 requires both spouses to execute a Deed of Trust (and a deed for that matter) of their homestead, or else it isn’t a valid lien. It makes no difference if it’s separate property of one spouse. So, the bank isn’t asking John to sign in order to encumber any title he has – he doesn’t have any – but rather to encumber his statutory homestead rights in that property.
More importantly, if John doesn’t sign the Deed of Trust the bank would not even have a valid lien on Jane’s interest.
“The homestead of a spouse or domestic partner cannot be…encumbered unless the instrument…is executed and acknowledged by both spouses or domestic partners…”
John’s credit isn’t good – the house can be Jane’s separate property – John still has to sign. How is all this resolved? Well, typically the bank won’t insist that John be on the title, and won’t have him sign the note – thus avoiding using his credit. He just needs to sign the Deed of Trust.
Oh, by the way, the borrowing spouse can execute the Deed of Trust on behalf of the non-owning spouse using a power of attorney. In Washington, RCW 6.13.060 specifically allows this.
Yours, Mine & Ours Review Points:
- Community Property is property acquired after marriage or registration of a state registered domestic partnership
- Homestead is where a couple lives or intends to live (RCW 6.13.040)
- A spouse or partner can own separate property, but if the property is a homestead both husband and wife or partners must execute a deed of trust; otherwise it is an invalid lien (RCW 6.13.060)