Texas Real Estate
Here is a messy one. My wife's mother ("Mom") passed away in 2011 intestate. While trying to sell the house, we uncovered some interesting title issues raised by the title company. Turns out that although her parents were divorced in 1981, nothing was ever done to transfer title to Mom. The only deeds recorded show my wife's father ("Dad") and Mom as having title to the property.
A divorce decree was filed which appeared to award the house to Mom as her separate property but nothing was ever filed in the property records. According to my research, it appears that a divorce decreee does not actually transfer title. So now, the title search includes exceptions related to Dad from 2008 as well as exceptions related to Mom and her new husband ("Step Dad").
In 2004, Mom and her new husband ("Step Dad") took out a home equity
loan against the property without Dad's signature. Although I noted a "Title Search" fee in the loan documents, I am perplexed that their search did not reveal that the title was still in Dad and Mom's name. Surely, they would have issues with loaning the money to Mom and Step Dad if they saw that Dad's name was on the deed. There did not appear to be any title policy for the transaction but there was a clause in the loan agreement where the borrower "warrants that borrower owns the property and has the right to enter into the loan agreement". Step Dad figured out that because Mom died without a will, he only has the right to live in the house but will never be able to attain title to it so he "walked away" from the house and the loan.
Question 1: Since the divorce decree awarded the house to Mom as her separate property, can an AJ in 2008 against Dad affect title to the house?
Question 2: Are there issues (flaws) in the home equity loan that could invalidate the lien against the house since the house is still titled in Dad and Mom's name? I am wondering if the lien is legally binding against the house or if their only recourse is to pursue Step Dad for the repayment of the debt. When we spoke to the lender about the loan, they seemed nervous about what we were going to say, as if they may have screwed something up. My wife has been sending payments to the lender to make sure that the loan is not in default until the house could be sold.