My soon to-be-ex Needs to Sign What?

 

Your friend of a friend from Michigan, Mr. Buyer, tells you he is newly retired, single, and ready to start the next chapter of his life in the Sunshine State, so he reaches out to you as his real estate agent to begin the property hunt. Two weeks later, he has found his dream home and after several days of grueling negotiations, you are under contract! Fast forward, and inspections have passed, the property has appraised, loan approval has been met, and Mr. Buyer gets his clear to close. Everything is moving along perfectly… but wait, Mr. Buyer is separated from his wife and legally still married! Oh no!

While many states in the United States recognize legal separation, Florida is not one of them. When purchasing a primary residence in the state of Florida, the Florida Constitution grants homestead protection to its residents. Florida homestead rights dictate the spouse of the titleholder has rights to the property, regardless of whether both parties live at that property. According to the Florida Constitution, Article X, Section 4, whether you are married, married but separated, or married but going through a divorce, it does not matter. Until the divorce is final, when purchasing a primary residence, your spouse must sign the mortgage and other loan acknowledgments, even if they are not on the loan and never intend to live on the property.

So how can you get Mr. Buyer to the closing table without having his wife join in on the mortgage? There are two options:
1) If Mr. Buyer has the funds, he can purchase the property using cash; or
2) If Mr. Buyer is using the property as his secondary residence or an investment property, his lender can likely add a non-homestead recital clause to the mortgage which will avoid spousal joinder. An example of a non-homestead recital clause is “Mr. Buyer states that this Property does not constitute his homestead and that he resides at 1234 Primary Lane, Lansing, MI, 49528.” It is of utmost importance to mention that Mr. Buyer will be required to sign an Affidavit of Occupancy at Closing stating that he intends to use the property as his secondary residence or investment property. If Mr. Buyer lies on his Affidavit of Occupancy, it could open him up to liability for mortgage fraud.

If neither of the above options are viable choices and the property will be his primary residence, unfortunately, Mr. Buyer will be required to have his spouse sign off on the mortgage and sign a few other loan acknowledgments. When working with buyers who are obtaining financing for their purchase in Florida, we encourage you to have an upfront conversation about their intended use of the property with them. If the buyer is still legally married, it is better to know at the beginning of the home search, as opposed to days before closing.

As always, should you have any questions with regard to when a spouse is required to join in on a mortgage, or any other questions pertaining to Florida’s homestead protection, we urge you to consult with your local real estate attorney.

Sincerely,

Mallory Moretti, Esq.
Berlin Patten Ebling, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com

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The Importance of a Municipal Lien Search

Performing a municipal lien search is crucial when purchasing property in this day and age. In many cases there are unknown or undisclosed fees, costs or other issues that will impact a buyer post-closing. In addition a municipal lien search generally will assist a seller in complying with contractual terms to avoid a default. Examples…

Short Sales – Working with Second Lenders

Anyone who works with short sales knows that it can be very difficult to get short sales approved when there is a second (or even third lender). To successfully complete a short sale, ALL lenders (among others) must agree. The problem is that in many instances, they do not. In fact, we have seen situations…

A New Buyer Can Be Substituted for One Who Walked

We have learned of a very interesting development with respect to Bank of America. Bank of America has advised that it will permit a new buyer to step into the shoes of a buyer who has walked away from a transaction.  Furthermore, Bank of America has advised that the process will not have to begin…

Deficiencies and Deficiency Judgements

We spend a great deal of time counseling prospective short sale sellers regarding the advantages of attempting to pursue a short sale rather than allowing their property to go through the foreclosure process. Many people do not realize that the foreclosure process is a two step process. The first step is the sale of the…

Bank of America Realtor/Broker Listing Agent Certification – Questions and Answers

The new Bank of America Realtor/Broker Listing Agent Certification (the “Certification”) has fostered some significant concern among real estate agents. The most common questions and our comments/responses are as follows: 1. Question: Does paragraph 1 of the Certification mean that Bank of America will not pay a commission. Answer: No! Bank of America never paid…

Wells Fargo Short Sale Addendum

As expected, Wells Fargo has followed suit with Bank of America and has put out a new Short Sale Affidavit (attached hereto). Similar to the agreements recently published by Bank of America, Wells Fargo appears to be getting more aggressive in trying to curb flips and low offers and is now requiring realtors and closing…

Bank of America Document Warning

Please be advised that Bank of America is now requiring the parties to a short sale transaction to execute certain form documents before they will consider your short sale for approval. The buyer and seller will be required to execute a new addendum, and somewhat interestingly, the agents involved in the transaction will also need…

Nonlawyer Assisting the Short Sale Seller: Ministerial Acts or UPL?

As you know, short sale negotiations (and negotiators) are coming under great scrutiny by local and federal authorities. There are significant new disclosures for non-attorneys, and now the Florida Bar is weighing in on the subject. In essence, various proposals under consideration by the Florida Bar suggest that a great deal of the short sale…

FTC Issues New Rules for MARS

The Federal Trade Commission (FTC) has issued new rules that might impact real estate practitioners who represent clients involved in short sale transactions. The Mortgage Assistance Relief Services (“MARS”) regulations define anyone providing services which assist or attempt to assist the consumer in negotiating a short sale as a “MARS” provider. Depending on certain factors,…
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