A married California borrower qualifies alone for a $390,000 loan on a home bought during the marriage. Her husband will not be on the note. Does qualifying without the husband’s income eliminate the need to encumber his community-property interest?
Correct Answer
B) He may still have to sign the deed of trust to encumber the community interest
Liability on the note and encumbrance of the community interest are different things: a non-borrowing spouse commonly signs the security instrument so the lien reaches the community property, without becoming liable for the debt. Other choices: co-borrowing is not required; signing nothing leaves the lien vulnerable; and signing the note is the one thing he is not being asked to do. Source: Cal. Fam. Code § 1102; community property
Why This Is the Correct Answer
Liability on the note and encumbrance of the community interest are different things: a non-borrowing spouse commonly signs the security instrument so the lien reaches the community property, without becoming liable for the debt. Other choices: co-borrowing is not required; signing nothing leaves the lien vulnerable; and signing the note is the one thing he is not being asked to do. Source: Cal. Fam. Code § 1102; community property
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