Non-Owner Occupied property

I was in the process of re-financing a non-owner occupied rental in Alabama, the lending company 1st told me that I would not need my spouse to sign the closing papers and then they told me my spouse would need to sign them. The property is titled in my name only and I have other properties in Alabama that my spouse has never had to sign. Are there any new laws in Alabama that anyone is aware of? :-\

Howdy Tom:

I had the same thing happen here in Texas. Texas is a community property state and some of the lenders were from out of state and did not really know the laws. The wife had to sign to deeds when I sold. Some lenders wanted the wife on the note and some did not care. I just went along with what ever they wanted. You may be going thru some of the same BS I went thru. I do not know of any new laws but I do not know much about Bama.


Thanks Ted,
The problem I am having is that the wife doesn’t want to sign the papers. I don’t want her to sign either. I checked and found out that Alabama is not a community property state so I don’t think the lender knows what he is talking about.


Is your wife’s income and credit being used to qualify the loan, or are you doing this on only your income and credit?

No my wife has no income and is not on the application. The property is currently titled in my name only and has been since I purchased it 3 years ago.

Why not challenge the lender? Ask them to explain why your wife has to sign anything if her income and credit weren’t needed to qualify for the loan.

Maybe it is just an error by the loan processor that your loan officer can help fix.

I challenged them but they insist that Alabama is a community property/common law state. I have not been able to find any evidence to support their claims.

Now that is confusing. I was under the impression that the state is either a community property state or a common law state, but not both.

There are nine community property states - Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In addition, Puerto Rico is a community property jurisdiction. In Alaska, spouses can sign an agreement making specific assets community property

The other states use the “common law” system of property ownership. In these states, it’s usually easy to tell which spouse owns what. If only your name is on the deed, registration document or other title paper, it’s yours. You are free to leave your property to whomever you choose, subject to your spouse’s right to claim a certain share after your death.

Even in community property states, married couples don’t have to accept the rules about what is community property and what isn’t. They can sign a written agreement that makes some or all community property the separate property of one spouse, or vice versa.

I have usually found it easier to just conform to the lender’s requirements even when I thought it unnecessary. Here are a couple of instances.

Instance 1. My state of SC is also a common law state. During a property acquisition a couple of years ago, the lender noted that the source of funds for my downpayment was coming from a joint checking account. My wife had to sign a statement to the effect that it was OK for me to use those funds to acquire property where I was to be the sole owner. When I asked how the statement needed to be worded, the lender even wrote it for me.

Instance 2. When we wanted to refinance our primary residence to get a lower interest rate and reduce our mortgage payment, I wanted to put the mortgage loan in my name and have my wife remain titled as sole owner of the property. We were just doing a rate and term refinance without any cash out. The lender said that my wife had to also be on the note but that her credit and income did not have to be considered when underwriting the loan. At the settlement table, I brought the general power of attorney that my wife granted me, so I could sign for my wife where needed. The lender would not accept the power of attorney, even though the settlement attorney said that everything was OK and he could not understand their objection. It was a little more difficult to get my wife to the settlement office, and the attorney did move the settlement to a handicap accessible room, but she did appear in person to sign all the documents.

Why not have your settlement attorney talk with the lender to see what can be worked out to the lender’s satisfaction. Perhaps just having your wife sign an agreement that designates your property as separate property will be sufficient.

Thanks for that great information. My wife is being very difficult and probably wouldn’t even sign something that shows the proerty is separate. I wonder what would have happended if when I applied I just told them that I wasn’t married. We have seperate accounts and she doesn’t file income taxes because she has no income. She too is on disability.
The funny thing about all of this is that I have 6 other mortgages for rentals I own in Alabama and I have never had to have her signature. 4 of the loans are in my LLC name and the others are in my name. One of those loans is with the lending company I am trying to get re-financing from. I even told them that when I re-financed my other loan with them they didn’t require my wife’s signature.
I really appreciate your feedback this has been so frustrating.