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| Question from one of Texas’s finest legal minds, Brenna Loyd of Schmitz, Loyd & Paul, PLLC. Give them a visit at their website - Get to know them. Hi Noel, Need your help again! Copied my client on this email. Simply put, we need to remove ex-husband’s name from the Deed of Trust (DOT). He is not (and never was) on the mortgage. We have a Special Warranty Deed (SWD) with owelty lien pursuant to divorce; she has since paid him out. He still wants his name removed from DOT. She is not finding a successful way to do this. Can you assist? Thank you, Brenna Loyd Wednesday, July 31, 2024 3:39 PM |
 Brenna: Always great to hear from you. Please know that our entire team admires you immensely for your profound competence and character. Your client is lucky to have you as her attorney. Thanks for your question. I am assuming the concern is for the DOT to the current the lender which holds the underlying mortgage(s). There is also Deed of Trust to Secure Owelty of Partition (DOTSOP) that would have listed husband as the grantee/beneficiary of the Owelty obligation. But, the DOT for the existing mortgage on the house would have the lender listed as grantee or creditor, the beneficiary of the deed of trust. First a brief - but, interesting - glossary. I want to clarify an important matter and a few words are used in legal as well as in colloquial parlance that are inaccurate. But, good definitions will clarify this issue. Special Warranty Deed A warranty deed is chiefly for conveyancing. That is, for transferring ownership or any type of interest or claim in a real property. Mortgage (i.e., Deed of Trust) A mortgage is a deed of trust. Some states use the title “mortgage” for the document which is a “deed of trust” in other states, like Texas. My home state of North Carolina uses the term “mortgage.” As a deed of trust, it is what is commonly referred to as the lien, or lien on title. Promissory Note The promissory note is what borrowers sign (as grantors) to the lender which advances funds for the purchase of a property. It can be called a mortgage note; but, it is not the same thing as a mortgage (i.e., deed of trust). This clarification is helpful: The difference between a Mortgage and a Note. Often people (lawyers, judges, homeowners, mortgage professionals and more) will say “he’s not on the mortgage.” What they mean is – he did not sign the promissory note; while, in fact, he (the spouse of the borrower in this case) is probably “on the mortgage” in that he signed the deed of trust, just not the promissory note. Warranty Deed Can be called a General Warranty Deed. Warranty Deeds mean that something is happening to the ownership interest in the real property. Someone is being “added” to the deed, “taken off” the deed or a set of entirely new owners are “added to title” by receiving a warranty deed from the sellers such as happens in the sale of a property. Acronyms DOT – Deed of Trust SWD – Special Warranty Deed WD – Warranty Deed or General Warranty Deed Now, The Question: Can we (or anyone) assist in removing husband’s name from the deed of trust? The Answer: That would only happen when and after the loan is financed with another lender and the existing loan (secured by the DOT) is paid off. The DOT is the lien that would be satisfied/paid in a new transaction. The lender cannot just erase a name from their DOT. The DOT would simply be released upon payment. The lender sends it back to the owners who can then have the famous “burning of the mortgage ceremony.” 😊 In other words, no real estate documents filed in public records can ever be altered once they are filed. Something else has to happen - a subsequent filing that corrects or indicates satisfaction of a prior-filed real estate document. Release not Removal The “removal” of the name of the grantor of such a DOT is accomplished by Releasing that lien. The Release of Lien is a short document, signed by the lender’s trustee and filed in the same county records where the original DOT was filed. It is not a REMOVAL of a name but a RELEASE of the lien. One cannot REMOVE a signator from an executed or (especially) from a recorded document....without committing fraud, I should add. For all intents and purposes, the SWD does (or should) assign to the grantee (wife in this case, the house-spouse) responsibility for existing/prior liens. That’s one of the main reasons a SWD is signed by the grantee (house-spouse) as well as by the grantor (departing spouse). It is not just the conveyancing of interest from one party to the other; but, the warranty involves an assignment of responsibility to the house-spouse (grantee). [Send me the SWD and I will review if you want.] Here is typical language in a Special Warranty Deed (as it should be used when a property is awarded to a party in a divorce action): Grantee [the house-spouse] joins in the execution of this deed for the purpose of accepting delivery thereof and acknowledging this agreement and the validity of the deed of trust lien, and vendor's lien created herein on the property and the priority and superiority of the liens to any right of use, occupancy, and homestead that she may have, hold, or claim in and to the entirety of the property. The Special Warranty Deed will refer to such liens specifically as Prior Lien, Reservations from Conveyance and Exceptions to Conveyance and Warranty:Deed of Trust, dated July 16, 2018, recorded electronically on July 20, 2018, in County Clerk's File No. 2018XXXXXXX, of the Official Public Records, Dallas County, Texas, in the amount of $100,000.00, the Grantor is NAME and NAME, Husband And Wife, the Trustee is Vladimir Putin, the Beneficiary We-Got-Loans, Inc, A MICHIGAN CORPORATION and all the terms, conditions, and stipulations contained therein, including, but not limited to, any additional indebtedness, if any, secured by said instrument. This deed is subject to all easements, restrictions, conditions, covenants, and other instruments or deeds of trust of record. Or, it will refer to those liens in general like this: Prior Lien, Reservations from Conveyance and Exceptions to Conveyance and Warranty: Of Record. [That is, any deed of trust filed of record on subject property] Notice that the grantee – the house spouse (your client in this case) – accepts and acknowledges the validity of the liens. While this does not remove ex-husband’s name from the deed of trust, it puts responsibility squarely upon the wife for meeting the terms of the underlying DOT. In effect, one might say that this is “removing ex-husband from the deed of trust. Note: [If an Owelty is to be created, the phrase - and lien for owelty would be inserted after “vendor’s lien.”] Here’s the good news for the husband. The ex-husband has no real liability just because his name is still on the DOT (as grantor). Here’s why: 1. He is no longer an owner – so it would be impossible or very strange that he could be sued by anyone for injury on the property. 2. Since he is not on the credit liability, he bears no responsibility for payment or repercussions for non-payment. 3. As well, the decree assigned the debt for the property to the wife (your client). That assignment of debt makes it clear that – unrelated to whoever signed the note – no other entity or authority could demand payment other than the lien holder (the lender). Had husband signed the promissory note, his credit would be at the mercy of its payment history going forward. But, the divorce court would not hold him liable for payment. That is a separate issue but it is relevant to the facts of your case. There is a separate set of questions and answers for when an ex-spouse remains on the promissory note. I deal with those questions elsewhere. 4. As a grantor) on a DOT and as a non-purchasing spouse – i.e., a spouse who did not join on the loan note - a lender’s only requirement of him would be if he made some sort of claim to the property. The DOT effectively means that he would have to assume the liability to satisfy that DOT (lien/loan) were he ever to assert ownership or claim to the property. That’s what the DOT meant when they were married and purchased the house even without husband’s signature on the promissory note but, with his signature on the DOT. It still means the same thing. So, if he never asserts interest or ownership in the property (which would be strange indeed and probably easily rebutted given his execution of the SWD), the DOT would protect the lender from ex-husband saying – “aha! I’m in the house, I never signed the promissory note, this is my homestead so I now have a house that I don’t have to pay for.” The holder of that lien (deed of trust / mortgage) simply says, stay if you want but if you do not satisfy the deed of trust (by abiding by the terms of the promissory note) the sheriff or trustee will soon be selling “your” house at auction. The same “you pay, you stay” principle remains intact. Does that answer the question? Let me know if you have any follow-up questions. Thank you. The more people know, the better they can navigate these confusing terms concerning their homes in divorce. Noel CookmanAmerica’s Premier Divorce-Lending Authority 972-724-2881 | [email protected] |
