Why do both spouses need to sign the paperwork?

Whether you’re a brand new investor an experienced professional you have probably come across this challenge.  You have one seller who is completely motivated to sell the house fast and a spouse who is feeling like they want to wait and see what happens.

Why do husband and wife need to sign the purchase and sale agreement?  If the wife is on board does it make a difference if the husband does not sign?  Should both husband and wife be present during the initial meeting?

I had one such situation come up last year where a seller had owned a rental property that was now falling apart.  This property was now a thorn in his side and was causing problems in his second marriage, with all the leaks, water damage, letters from the city, problem tenants, and so forth.  To make matters worse he was 2 months behind on his mortgage.

This house was causing him so much aggravation that his second wife refused to have anything to do with it.  Part of the reason that his current wife hated the property was because this was the primary residence of the husband and his “Ex”.  She wanted her husband to sell the house fast and just get rid of it but she was afraid to sign any of the sales agreements because she didn’t want to be on paper with this property.  We had to resort to a quit claim deed prepared by her attorney to get the transaction closed.

What is Tenancy by the entirety?

This is a special form of property ownership where the owners are husband and wife.  Each spouse has an equal, undivided interest in the property.  Upon death of one spouse the estate automatically transfers to the surviving spouse.

The most important aspect here is that title can only be conveyed by a deed signed by both the husband and wife.One spouse cannot convey a ½ interest in the property.

This form of ownership can be terminated by the death of either spouse, a divorce decree, or by mutual agreement of both spouses.  An example of such is prenuptial and free-trader agreements that can allow one spouse to buy and sell properties without the consent of the other spouse.I won’t get into those here.  You should consult with your own attorney about prenuptial and free trader agreements.

When the property goes to closing the attorney or Title Company will do a title search and see that a particular seller is married.  If so, they will not close the transaction without some form of written consent from the other spouse.  The reason for this is that the other spouse would be able to file a claim to this property in the future.  Little details like this are important.  It’s easy to want to take the signed contract and run but you want to develop a sense of diligence and thoroughness at these sensitive moments.  You’re much better being up front and tie up all the loose ends so you don’t have to go back to the sellers later saying “we forgot about this”.