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Written by
Noel Cookman

Should My Client Sign the Special Warranty Deed Before The Ex Refinances?

Published On 
November 28, 2018

Great Question from an Attorney

My client (Wife) will be receiving a payout from a refinance of the marital home. I know that Husband will need to sign a Deed of Trust to Secure Owelty of Partition, but I am afraid of the implications if Wife signs a special warranty deed prior to husband refinancing the home. What should she do / What do the title companies want?

Am I just still full of turkey and over thinking things?

Family Law Attorney

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Hi Family Law Attorney,

Great hearing from you. Not too full of turkey at all…well, I don’t know about that – but it IS an important question.

A couple of thoughts:

First of all, sorry it has been over an hour and a half and I am just now getting this back to you. I have a clear plan whereby I will be more accessible, more readily – especially for those times when you need me on the spot. More on that later.

If the decree awards husband the house, for all purposes, a granting of wife’s interest in the house is accomplished. The “with Encumbrance for Owelty of Partition” is the part which fixes a settlement amount payable to wife. As well, the refinance transaction cannot happen without Wife's execution of the Special Warranty Deed. They are a hand-in-hand series of events and, pretty much, take place simultaneously...if the lender is doing it right.

Still, to add incentive to husband, hold on to the executed signed/ notarized SWD w/Encumbrance for Owelty of Partition until you can deliver it to the title company which is closing the deal. Ask the title company what day the loan will fund. That’s the drop-dead date when the original signed/notarized deed must be filed. That is, IF the title company and lender know what they are doing. Provide a scanned copy of the deed if necessary. But, hold it in safe-keeping until the loan has closed.

I have also seen attorneys deliver the original deed with instructions - do not file this unless and until the loan has closed.

Here’s what I think the real concern might beIS husband, INDEED, refinancing the house with a payout to wife?

To put teeth into such a “requirement” (which is not a requirement in the sense that a court cannot make a lender advance funds), I recommend what you’ve probably done many times already – set trigger dates. The first being

1) If house has not been refinanced and wife paid her Owelty interest in house by X date, house will be listed for sale with agent agreeable to both parties at a price agreeable…blah, blah, blah; then,

2) if house has not sold by certain date, or if parties cannot agree, such-and-so shall be appointed as receiver, blah, blah, blah.

The best way to know if/when the financing and payment of Owelty interest will happen – of course – is for the borrower to call me. 972-724-2881 or [email protected]. That way, before divorce is final, everyone knows exactly what and when. No guessing, no hoping, no “ooopsies.”

If husband is working with another lender, the best way to determine if husband is indeed fully qualified and actually following through with the financing is to ask husband’s side – “have you obtained an appraisal ordered by the lender?”  This smokes out insincerity and partial approvals (pre-approvals not being worth the paper they are written on). Another question is “has your lender reviewed the draft of the decree? And, if not, why not?” Of course, we know the answer to the “why not?” It’s because I’m not working on it. ?

The fact is, in times past, if the decree included the proper and exact legal description of the property, clear awarding and divestiture language and a dollar amount clearly tied to wife's interest in the property, the decree could be filed in property records AS the Special Warranty Deed with Encumbrance for Owelty of Partition. But, title companies do not like this as it's not "perfected" to their liking - it lacks that perfecting document known as the Special Warranty Deed (with Encumbrance for Owelty of Partition, in this case). It is now rare enough that, you might be able to "hold the trump card" by holding on to that SWD until you are satisfied that husband is, in fact, following through with the refinance transaction.

Let me know if I have properly addressed your question.

Noel Cookman
America’s Premier Divorce-Lending Specialist
office 972-724-2881 † fax 866-295-0567

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As always, you answered my question and then some. They are still in the early processes of discussing, but I have given them your card and information.

Family Law Attorney


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