Banks can be so annoying at times. All that paper work. And they can be so picky, one reader complains.
Why is it that the bank demands that her husband sign all the documentation for the sale of a small piece of property she owns, even though he is not even listed on the deed, the legal ownership document?
The bank is not being sexist. It should and probably would make the same demand if the property was in the husband's name alone.
Community Property Law
Banks and other financial institutions, advised by teams of lawyers, often show an overabundance of caution. But in California, where the community property laws often affect ownership between a husband and wife--sometimes even without their knowledge--it is prudent to obtain the signatures of both spouses when you are selling or buying real estate. That's true even if only one spouse is listed on the deed. And you'll find that most banks, escrow companies and other firms involved in the sale of real estate demand both signatures.
Even if one spouse legally owned a piece of land as separate property, obtained prior to marriage or received as a gift during marriage, it is still possible that the other spouse may now own a portion of the land as community property. That would be the case if "community funds" (for example, the earnings received during marriage) were used for any of the mortgage payments, property taxes or improvements.
Indeed, state law (Civil Code Section 5127) provides that a spouse has up to one year to challenge the transfer of ownership and assert community-property ownership after the other spouse signed away property, even if it was in his or her name alone.
"There is usually no reliable way for a third party to know whether under the law a married person really owns a piece of real property all by himself," explains Mary Randolph in her excellent self-help text, "The Deeds Book."
"Having both spouses sign the deed instantly and easily eliminates any doubts about the completeness of the transfer, and no one has to worry about whether or not the property was separate or community."
So if you are buying property from a married person in California, pretend you are a bank and demand that both husband and wife sign on the dotted line.
Otherwise, when you try to finance a new mortgage, or sell the property again, a bank or buyer may raise serious questions about the previous ownership and the validity of the sale to you.
And who needs more headaches?
Another reader wants to know if her children from a previous marriage can inherit her portion of the house she now owns "jointly" with a new husband. The simple answer is no, not if the new house is held in "joint tenancy."
Even if she provides for her children in her will, upon her death all property held in joint tenancy automatically becomes the property of the other joint tenant, no matter what her will may say.
If she wants to leave her portion of the house to her children, the ownership of the property should be changed to either community property or "tenants in common," depending upon the individual situation. "The Deeds Book," mentioned above, which is subtitled "How to Transfer Title to California Real Estate," explains how to do this and includes sample forms. It is published by Nolo Press in Berkeley.
Attorney Jeffrey S. Klein, The Times' senior staff counsel, cannot answer mail personally but will respond in this column to questions of general interest about the law. Do not telephone. Write to Jeffrey S. Klein, Legal View, The Times, Times Mirror Square, Los Angeles 90053.