Arizona is a community property state… so when one spouse purchases a home and does not go on title, as an owner, the non borrowing spouse will need to sign a Disclaimer Deed.
What should you know about Disclaimer Deeds?
A disclaimer deed is a document that is filed with the deed that simply states that the non borrowing spouse hold no interest in the property.
It’s important to note that while you may not hold interest in the PROPERTY…. that doesn’t mean you don’t hold interest in the equity of the property. So, in the case of a divorce, you may be obligated to divide assets, including equitable interest in the home.
When a couple is buying a home, there may be times, like with poor credit, that one spouse is not going to be on the loan. Depending on the lender, you may be able to add the spouse on title only, but you will want to get the blessing of the lender first. You may also need to spell that out in your offer, that Mr X is to be on title only.
Agents: If you’re reviewing an offer and notice that only one name is on the Prequalification form, but 2 are on the contract, make sure to verify that everything was written correctly, and if one of the parties is title ownership on title only, make sure that it’s spelled out and approved by the lender before you get to the close of escrow.
Just like the Deed to the home, the Disclaimer Deed will need to be signed and notarized by the non-borrowing spouse, so if they do not intend to be there for the signing of the documents, make sure that this is taken care of before. The Disclaimer Deed can be prepared and signed any time.
What do you do if the borrower is separated?
In many cases, the Disclaimer Deed is needed because the borrower, while still technically married, is separated and seeking a new place to live. In this case, you will want to make sure that the spouse is ok with signing the Disclaimer Deed… And I highly recommend taking care of that as early on as possible in order to ensure things don’t get rough later and it’s held ransom. Not that anyone would do that.
Agents: If you are helping a buyer find a home, make sure you’re asking them if they’re married before you write the offer. You’d be surprised at how often that info slips one’s mind.
Does the non vested spouse have to acknowledge the closing disclosures?
TRID guidelines require that the Closing Disclosures (The CD) is sent out and signed by the borrowing party at least 3 days prior to close. This is the borrowers 3 day right to rescind. As a non-borrowing spouse, they do not have to sign the CD in order to close.