I own a house in Florida (Pinellas county) which I purchased…

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I own a house in Florida (Pinellas county) which I purchased…

I own a house in...

I own a house in Florida (Pinellas county) which I purchased before i was married. We are trying to purchase a new home in Florida (pasco county). We aren't having any problems being approved for a loan, but I have some concerns. First concern is that since I'm the only one on the credit app(my wifes credit is bad) they want my wife to sign the mortgage which will state she relinquishes her rights to the house (basically homesteading it). We have researched this and I understand it's to help the bank make it easier to foreclose on a house since she won't be on the homestead. I don't have a problem with this as I don't plan on going into foreclosure. However I verified with them that this won't affect other rights such as if something happened to me or if we got divorced and they said it only affects the homestead ability. So my first question is, is that accurate?

Second question is, since the house is only homesteaded in my name, and my first house is also in my name (will transfer homestead from it to my new one), if I did foreclose on my first house, which I don't plan on (will rent it out), can they go after my new house whether I have equity in it or not and put a lien on it if my wife is not on the homestead, and what is the likely hood they would do this?

Thanks in advance!

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9/16/2010

Real Estate Lawyer: P. Simmons, Lawyer replied 9 years ago

P. Simmons, Lawyer

Category: Real Estate Law

Satisfied Customers: 42,115

Experience: 12+ yrs. of experience including real estate law.

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Thanks for the chance to help. I am an attorney with over 12 years experience. Hopefully I can help you with your legal question.

I wanted to let you know I am working on this answer...but need a few more minutes to complete

Customer reply replied 9 years ago

They told me that she has to be at the closing and that we are purchasing the house as a married couple which gives her certain rights. They said the main reason for that "relinquish of rights" statement in the mortgage that she has to sign as well as I do is to keep her from being homestead with me on the house. They did say that it won't affect other aspects such as if I die since we are a couple and she will be signing a bunch of documents that I will. They said I could if I wanted to feel more comfortable about it, get a quit claim deed after we close on the house. They also said I could will it to her like you mentioned. Are you familiar with a quit claim deed and what it does?

Real Estate Lawyer: P. Simmons, Lawyer replied 9 years ago

Wait, perhaps I missed this...will she be on the title to the home when "all the smoke clears"?

And yes I am very familiar with a quit claim deed and what it does

Edited by psimmons on 9/16/2010 at 8:07 PM EST

Customer reply replied 9 years ago

Well that's what they weren't clear on. They didn't mention anything about the title of the house, they only mentioned that we would be purchasing the house as a couple, and I couldn't re-finance or sell the house or do anything without her approval and signature as we purchased it as a married couple. Does that make sense?

Customer reply replied 9 years ago

Ok, so I'm going to accept answer in a few here, I promise:) I just want to make sure I'm 100% clear on a few issues. What do you mean when you say "give them the ability to call the loan....make you pay it all back at once"?

And also, I know you said homestead will protect me greatly on the new house in case my rental forecloses, but could they still put a lean on the house for any remaining amount that they don't get if they foreclose my first(rental) and sell it for less than my loan was worth?

Customer reply replied 9 years ago

Ok, so I will probably just go with putting her in a will that states she get's the home if something happens as that's my only concern with having kids as well in the house. I will also get a more clear answer in writing from the lender in regards XXXXX XXXXX quit claim.

Thanks for your assistance on that issue.

In regards XXXXX XXXXX other lender putting a lien on my new house if I foreclose on my rental house, that lien doesn't necessarily mean I have to pay that amount right then in there or in addition to my mortgage payments, but just means that like you said, if I sold the house, they could collect that amount with whatever profits I make?

Thanks

Real Estate Lawyer: P. Simmons, Lawyer replied 9 years ago

Correct. Let me be clear. You ask

In regards XXXXX XXXXX other lender putting a lien on my new house if I foreclose on my rental house, that lien doesn't necessarily mean I have to pay that amount right then in there or in addition to my mortgage payments, but just means that like you said, if I sold the house, they could collect that amount with whatever profits I make?

The answer is they can NOT force a sale...that is why the law is so strong.

SO if they sue you and win, they can sit on the judgment. Or they could apply the judgment to your homestead in the form of a lien.

But since they can not force sale, they would have to wait...wait for you to sell...if you never sell...well, then they do not get paid.

But yes, if they have a lien, and you sell, they would have a place in line for any profits from the home (after the mortgage is paid off)

P. Simmons, Lawyer

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Customer reply replied 9 years ago

GREAT! Thanks a bunch for you answers.

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Real Estate Lawyer: P. Simmons, Lawyer replied 9 years ago · Answer 1

Thanks

Its more than just the bank not wanting to possibly foreclose...its also since if your wife is on the title and runs up debt in her name alone, and does not pay, those creditors could force the sale possibly. Yes, this also comes back to homestead (FL has a very strong homestead law) but its not just the banks ability to foreclose, its also to protect this asset from other creditors.

As for what else will this affect? Well, she would not be on the title...so she will not have an ownership interest.

How will it affect if you die? Well, its yours...so you COULD will this to someone else. And if your wife did not agree with that she would be forced to sue to try and get a portion of the value of the home

And if you divorce, the fact its in your name only will not prevent her from asking the court to give her a percentage of the equity in the home...the FL divorce law of "equitable distribution" will allow this.

Now, what if you loose your rental home....can they sue you?

You bet they can...but can they take your "homestead"?

Not likey. As I said, FL has a very strong homestead protection. They can sue you and get a judgment, but they can not force sale of your homestead.

Let me know if you have more questions

Real Estate Lawyer: P. Simmons, Lawyer replied 9 years ago · Answer 2

The title is the key here.

But that they are telling you that you can quit claim AFTER the purchase is good...GET THAT IN WRITING.

Many home loans have a provision that prohibits transfer of interest after purchase...and a quit claim deed is just that. If the loan has such a provision, a quit claim could give them the ability to "call" the loan...make you pay it all back at once.

The other issue is that a quit claim deed transferrs ALL of your interest...so a quit claim deed would make this her house.

Now, its possible to use a "strawman" and convey the interest so you get what you want (both of you on the title)-you should use a local attorney to do this so it gets done properly.

But again the key is to make sure there is no prohibition of this in the mortgage agreement. So you will want to read the load documents very carefully.

Let me know if you have more questions

Real Estate Lawyer: P. Simmons, Lawyer replied 9 years ago · Answer 3

Many loans have this provision...is standard.

It will say something like

"if you convey (transfer) your interest in this property, that is grounds to have the loan due and payable immediatly"

The exact language may vary, but the idea is the same...the bank does not want you to sell the home to someone else but keep the loan.

Now, would they "call the loan" on a quitclaim deed to your wife? Not likely...but why not get that in writing??

As for the homestead...the homestead act (again, I think the strongest in the nation currently) prevents any creditor from forcing sale.

They can put a lien on the property...so if you sell they can be in line to collect...but they can NOT force a sale.

Let me know if you have more questions...happy to help if I can.

Real Estate Lawyer: P. Simmons, Lawyer replied 9 years ago · Answer 4

Real Estate Lawyer: P. Simmons, Lawyer replied 9 years ago

welcome!

I own a house in Florida (Pinellas county) which I purchased…

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