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David L
David L, Lawyer
Category: Real Estate Law
Satisfied Customers: 3171
Experience:  Attorney licensed in multiple jurisdictions.
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Your earlier reply: The bank can always foreclose out the mortgage.

Resolved Question:

Your earlier reply: The bank can always foreclose out the mortgage. The property is secured by the mortgage. You can change ownership any which way; that will have no effect on the lender's ability to foreclose.

If my wife did not sign the mortgage and did not sign the loan, can't she sue the bank for foreclosing on her property?
Submitted: 2 years ago.
Category: Real Estate Law
Expert:  David L replied 2 years ago.

David L :

Last you mentioned that wife signed the mortgage but not the note. You now ask: If my wife did not sign the mortgage and did not sign the loan, can't she sue the bank for foreclosing on her property? Which statement is correct?

David L :

As another matter, you also mentioned this was an investment property. If so, then it is NOT homestead property and is not protected by the Florida Homestead laws. Thus, even if she did not sign the mortgage, I still don't see how that becomes a legal issue for the bank, although I do agree that it would be a problem had this been your wife's homestead property. I am still missing that connection.

Customer:

The bank told me to purchase the property in cash ($220,000), in order to pledge this property to secure the Business Line of Credit for $200K. Thus, my wife is on the Deed but not on the business loan/note or mortgage. We decided to find tenants instead of leaving it empty. If I said that my wife signed the mortgage, it was my mistake (she signed the mortgage for a different rental property not this one). This property was exempt from the bankruptcy estate/assets because it was jointly owned (my wife did file for bankruptcy). I filed a Business and a Personal Chapter 7 Bankruptcy. The bank loan was a business loan but I pledged the property as collateral for the loan without my wife's knowledge or agreement. Does this help?

Customer:

Correction: My wife did not file bankruptcy.

David L :

What is the issue with the defective mortgage?

Customer:

Her name and approval signature were omitted from the bank mortgage, thus the document that I signed is invalid.

David L :

Why did they need her approval?

Customer:

Because the property in question was jointly owned with me.

David L :

tenants by the entirety?

Customer:

Yes.

David L :

Ok :)

David L :

Sorry it took so long for us to sync up on the details.

David L :

This issue would take some legal research. I don't know her legal rights off the top of my head.

Customer:

What do recommend?

Customer:

I meant to say, what do you recommend?

David L :

You need to determine how this issue affects your wife's legal rights and the bank's ability to foreclose out her interest.

Customer:

It can wait until tmw, just name the fee and I will pay you via the bonus button. Otherwise, I will repost my question for another attorney to comment. Whatever you prefer?

David L :

This will take some time to research. tell me what you think is fair.

Customer:

$150?

David L :

Fine. I'll post my research here tomorrow and we can chat further.

Customer:

Okay, good night.

David L :

Have a great evening. Interesting topic.

David L :

I'm going to post information as I get it. When I'm done, I will note that I am done and provide a final summary.

David L :

Neither spouse has a separate right in property owned by the entirety. As a general rule, neither spouse acting alone can sell, mortgage or otherwise encumber entireties property without the joinder of the other spouse. Additionally, property held by the entireties cannot be encumbered or conveyed to a third person unless both spouses execute the same instrument. Anderson v. Trueman, 100 Fla. 727, 130 So. 12 (Fla. 1930). However, there are two exceptions to these general rules. First, where fairness dictates, the courts can apply doctrines of estoppel to prevent one or both spouses from denying the validity of an instrument executed by just one spouse. Uniform Title Standard 6.3. Second, the courts can construe separate, identical deeds executed substantially simultaneously as one deed. MacGregor v. MacGregor, 323 So.2d 35 (Fla. 4th DCA 1975).

David L :

Comment:

David L :

This fact plays well in your favor. From the bank's perspective and as a potential defense, they might look closely at:

David L :

"where fairness dictates, the courts can apply doctrines of estoppel to prevent one or both spouses from denying the validity of an instrument executed by just one spouse."

David L :

This would be a fact-specific analysis of the factors surrounding the execution of the mortgage and the failure of the bank to obtain your wife's signature and joinder on the mortgage.

David L :

A mortgage on an estate by the entirety executed by only one of the spouses is ineffective as a mortgage of an interest in the property so long as the estate by the entirety exists. However, any warranty of title contained in the mortgage is effective as a contract between the parties expressing an intent to create a lien on the mortgagor's interest for the debt. Therefore, if at a later date the non-mortgaging spouse dies mortgagor acquires the title from the other spouse, the entire fee interest in the property vests in the spouse and the mortgage becomes a valid lien on the property at that time. Hillman v. McCutchen, 166 So.2d 611 (Fla. 3d DCA 1964), cert. Denied, 171 So.2d 391 (Fla. 1964); and, Pitts v. Pastore, 561 So.2d 297 (Fla. 2d DCA 1990).

David L :

Comment:

David L :

This is an interesting concept. This means that the mortgage may be ineffective, but only for so long as the tenancy be the entirety exists. Thus, for example, if your wife dies, the tenancy by the entirety is destroyed and the bank can then foreclose.

David L :

The tenancy by the entirety may be terminated by both spouses conveying to one of them, or by either one of them conveying to the other, or by both of them conveying to themselves in some other capacity (i.e., as joint tenants with right of survivorship or as tenants in common). If the tenancy by the entirety is terminated by a conveyance by one spouse to the other, the joinder of the grantee-spouse is not necessary for the conveyance to be effective.

David L :

Comment:

David L :

This is an important point, as well. The last thing you want to do at this point is destroy the tenancy by entirety. Thus, any deed (such as the quit claim deed), which purports to destroy the tenancy by the entirety status would clearly be a bad idea.

David L :

More case law:

David L :


Entireties property is not subject to a lien against only one tenant. Teardo



v. Teardo, 461 So.2d 276 (Fla. 5th DCA 1985).

David L :

Interesting case here:

David L :

Not directly on point, but clearly discusses the fact that one tenant cannot mortgage the property without the other tenant joining in.

David L :

I will continue with this in the morning, but I am leaning toward a belief that at least based on the facts as you stated, the mortgage is invalid to currently encumber the property and that the bank cannot foreclose out wife's interest. So long as the tenancy by the entirety remains in tact, this should continue to be true. Thus, a divorce, death or other deeding of the property could terminate the tenancy protection and provide the bank with the ability to pursue the mortgage. There is also the other potential defense I noted above, which would have to be analyzed in light of the facts surrounding the execution of the mortgage.

David L :

More case law:

David L :

It is the law that property held by the entireties may not be encumbered or alienated without the joint action of both parties; one party may not act so as to defeat the other's rights in the property. Anderson v. Trueman, Fla.1930, 100 Fla. 727, 130 So. 12; Tingle v. Hornsby, Fla.App.1959, 111 So.2d 274.

David L :

Any, I think that about does it. In summary, the rule is that property held by the entireties can't be encumbered without the joint action of both parties. In your case, if the property was held in TBT at the time the mortgage was granted to the lender and if wife never joined in the mortgage, then lender cannot sue wife to foreclose. If you destroy the TBT, such as by death or deed, lender can them come after your interest, which would no longer be protected.

Customer:

If we decide to sell the property held in TBT, can the lender come after us for the proceeds of the sale in whole or in part?

Customer:

Is there a case law that is more current (2002 and on) and related to a business/personal bankruptcy by one of the spouses in the TBT? Equally important, one attorney indicated that the Lender might argue their case referencing "New Law." Does any new law exist today that might give the Lender more leverage (an advantage) in arguing this case in State Court?

Customer:

I will be signing on again this afternoon. Thank you.

David L :

I will check into these questions and respond accordingly.

Customer:

Thank you. You have been very resourceful. I will follow up with you this afternoon after my root canal is completed. If you need more time, no problem on my end. Whatever works best for you.

David L :

Let me see what I can find.

David L :

You asked: If we decide to sell the property held in TBT, can the lender come after us for the proceeds of the sale in whole or in part?

David L :

This 2004 case seems to answer that question: http://scholar.google.com/scholar_case?case=7127212750104735316

David L :

The issue presented in this appeal is whether proceeds from the sale of property held as a tenancy by the entireties retain their character as entireties property when deposited in an attorney's trust account. We hold that the proceeds do remain entireties property and affirm the judgment of the trial court dissolving a writ of garnishment against the trust account by a creditor of one spouse

David L :

The proceeds from the sale or rental of tenancy by the entireties property are also held as a tenancy by the entireties and are owned in total by both the husband and the wife. Dodson v. Nat'l Title Ins. Co., 159 Fla. 371, 31 So.2d 402, 404 (1947); Miller v. Rosenthal, 510 So.2d 1127, 1128 (Fla. 2d DCA 1987); Brown v. Hanger, 368 So.2d 63, 64 (Fla. 3d DCA 1979); Sheldon v. Waters, 168 F.2d 483, 485 (5th Cir.1948). Here, there is no dispute that the Molinaris owned the rental property as a tenancy by the entireties and the proceeds from the sale retained that character.

David L :

Interestingly:

David L :

In Hunt, a husband's conveyance of entireties property to his wife terminated his interest in the property and, thus, the entireties character of the property. 200 So. at 77-78.

David L :

There is no restriction on how a couple may spend the proceeds from the sale of entireties property as long as both spouses are in agreement. See Oliver v. Givens, 204 Va. 123, 129 S.E.2d 661, 664 (1963)

David L :

This leaves your last issue to address: whether your bankruptcy had any effect on the TBE arrangement giving the bank some sort of legal advantage.

David L :

The United States Court of Appeals for the Eleventh Circuit, in In Re Sinnreich, 391 F.3d 1295 (11 th Cir. 2004), recently affirmed that tenancy by the entireties property is protected in bankruptcy against all creditors except the Internal Revenue Service.

David L :

Finally, I don't know of any "new" law giving the lender an advantage. The new bankruptcy laws passed in 2005 changed some of the laws dealing with homestead protection. For example, the Act makes two significant changes to the Bankruptcy Code for residents of opt out states, such as Florida. The first is an increase in state residency required before the state’s exemptions can be used in bankruptcy, from 180 days to 730 days (approximately two years). The other significant change to the state exemptions is a set of restrictions on the protection of homesteads in bankruptcy. The most important of these requires that the homestead, including previously held homesteads within the same state, be held for 1215 days (approximately three years and four months) prior to the bankruptcy filing, or be limited to $125,000.

David L :

However, these are homestead restrictions only. The Act makes no change to the treatment of tenancy by the entireties property in bankruptcy. Section 522(b)(2)(B) of the Bankruptcy Code exempts from the bankruptcy estate any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a tenant by the entirety to the extent such interest is exempt from process under applicable non-bankruptcy law. The Act’s 730-day residency period for taking advantage of a state’s exemptions does not apply to tenancy by the entireties property.

Customer:

Excellent! Thanks again.

David L, Lawyer
Category: Real Estate Law
Satisfied Customers: 3171
Experience: Attorney licensed in multiple jurisdictions.
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