Robert and Susan are married and own a home in New Mexico that Robert purchased with his separate property funds before the marriage. The deed lists only Robert as the owner. Robert now wants to refinance the property in his name alone, without Susan's involvement. The lender requires a deed of trust on the property as security. Under New Mexico law, which of the following most accurately describes the signature requirements for the refinance?

Correct Answer

B) Both Robert and Susan must sign the deed of trust because any property owned during marriage in New Mexico is presumed to be community property unless clearly documented as separate

In New Mexico, there is a legal presumption that property acquired during marriage is community property. Even though the property was purchased with Robert's separate funds before the marriage, the fact that the couple is now married and the lender is placing a new deed of trust on the property creates a practical and legal complication. Most New Mexico lenders and title companies require both spouses to sign the deed of trust (even for separate property) because: (1) the separate property character must be clearly established and documented to overcome the community property presumption, and (2) if there is any doubt about the property's character, Susan's signature on the deed of trust protects the lender's security interest against a later claim by Susan that her community interest was encumbered without consent. Without clear documentation establishing the separate property character, the community property presumption applies, requiring both signatures.