Question about Assumption Deed of Trust provision? - Posted by Percy

Posted by JasonTX on January 24, 2001 at 21:43:08:

When My friends got divorced they had some similar (not exact) verbiage like that. The purpose of their clause was to protect the husband’s interest in the house.

Basically, the wife stays in the house and makes the payments. When their child reaches 21, the house is automatically put up for sale and the profit split.

This limits her in a great way. If she wants to move, he is allowed to move back in and take over the payments.

Anyway, when divorces are concerned you will see some pretty “tricked up” verbiage!

Question about Assumption Deed of Trust provision? - Posted by Percy

Posted by Percy on January 24, 2001 at 11:41:08:

Here is the situation. Couple recently went through a divorce and wife received the house. She now wants out of the property. However, she signed a Deed of Trust to secure Assumption with the ex-husband as a beneficiary.

We are looking to purchase the property ‘Subject To’ but the Seller is concerned about the wording in the Deed of Trust. One of the provisions read: “If any of the property is sold under this Deed of Trust, Grantor shall immediately surrender possession to the purchaser. If Grantor fails to do so, Grantor shall become an tenant of sufferance of the purchaser, subject to an Action of forcible detainer.”

She thinks this says the ex-husband will automatically get the house back if she sells it without paying off the underlying loans. But to me it sounds like the purchaser (me) would be the one that should get possession.

Any thoughts?

lease/sublease option - Posted by AWWMi.

Posted by AWWMi. on January 24, 2001 at 22:59:45:

Would the same problem be run into with the husband under a lease option or land contract?

Assumption Deed of Trust - Posted by Bud Branstetter

Posted by Bud Branstetter on January 24, 2001 at 21:29:21:

The Assumption Deed of Trust would normally be used to in a wrap type of situation. Since he was permitted to do so by Garn St. Germain the lender would not have had a problem. Without reading the rest of the language I wouldn’t have a problem with it either. I would not be taking title subject to. Instead I would be controlling it using the PACtrust concept. Since it is not a sale there would be no violation. Yes, the husband could bluster and attempt to do something about it. I think he would lose but it might you cost some dollars defending an action he takes. Of course you would have to have a Bronchick type attorney to read the thing and give an opinion.

Re: Question about Assumption Deed of Trust - Posted by JPiper

Posted by JPiper on January 24, 2001 at 14:15:30:

Interesting Percy. It sounds like a divorce lawyer finally attempted to do his job! The wife got the house, but the ex-husband theoretically has a way back into the property through this deed of trust. Perhaps there is a first mortgage in both names, with the possibility that the wife might fail to make payments. If this results, the ex-husband would be able to make payments for her, and then probably foreclose. At least that was probably the thought behind it. And a good thought in my opinion.

The clause that you quote confuses me without seeing the rest of the document. Chances are that the words ?grantor? and ?purchaser? had to do with the husband and wife?not you as a perspective purchaser. It?s possible that the attorney who wrote this has incorrectly written it too. However based on the short quote that you posted, it?s only confusing to me because it makes no sense.

My guess is that the purpose of the agreement was to do something along the lines of what the wife suggests. There may be other clauses that would create a DOS clause in the document as well. Whether the document was written incorrectly though is hard to say.

In this particular case I would be very careful about attempting a subject to assumption. The reason is that the ex-husband is NOT a distant bank who is unlikely to know about a transfer of the property. He?s going to know would be my guess. And if he believes that his name is still on a loan and his wife has transferred the house he?s apt to react?wouldn?t you? On the other hand, it may be that you could get his approval in the transaction?not likely, but possible.

I?d reread that document carefully. Perhaps post additional verbiage if you think it will clarify. By the way, I would doubt that a deed of trust could turn anyone into a tenant?and then evict them. I doubt that would be enforceable. Maybe the divorce lawyer thought that was a good idea?but he probably should have gotten some input from a real estate attorney.


Re: Question about Assumption Deed of Trust - Posted by Percy

Posted by Percy on January 25, 2001 at 13:29:21:

To clarify. This is a Deed of Trust to secure the payment on the underlying first loan on the property. The husband and wife are both liable on the first. After rereading it more closely, it looks like their attorney screwed up the wording. Other portions of the document reference the parties as Grantor/Beneficiary and spells out rights of each. The clause I quoted was included in the General Provisions section.

I was originally going after the property ‘Subject To’. I think I am going to take Bud’s advice and take the PacTrust route.