Can You Get Property With Your Spouse Sign-Off?

Question

Hi There,I'm having similar issues like this poster from a few years ago - https://www.biggerpockets.com/... I'm definitely more hard headed then her lol

I can't get my spouse on board with investing. They hate the headache and want nothing to do with it. I have my own funds from my own ventures. I want to jump into the investing game, but I heard since I live in a community property state (Texas) that I have to have my spouse sign off on the docs. That's a major stop for me.

I'm trying to get other family members involved and they are willing to invest with me via a trust. I have talked to my spouse and said I would invest with my own funds. However, we are getting into issues. I want to see if I can go with a business partner or a trust do I really need to get my spouse to sign off. I've even considered getting property out of state if that is possible.

It's been a really frustrating point. I think I have an avenue and my spouse knows I'm going to invest regardless. I just don't want to be held up because my spouse needs to sign off on every transition I do.

Kathy Henley · Answer

@John B. Start by understanding community property laws. They are good. Earnings made by the married couple during their marriage years are shared 50/50; marital money. No one gets a smaller cut because they paused to have babies, or something. Your spouse should know about the family investments and agree that marital money is buying property (investment property or buying a family home). It might not be the day to day decisions, like shopping for a water heater, that you need approval on, but more Deed of Trust, nest egg down payments or awareness of loan obligations. No one should hide marital assets. The success and failure will be shared 50/50.

Does you family have goals to retire some day? To create family wealth? There are many paths on how to get there. And passive income from RE investing is a great one!!! Help your spouse face her fears by gathering knowledge. There is a risk of failure - buying a bad deal or not paying attention to your property manager. The up side is that properties are so liquid. They can be sold if there is a change of circumstances which demands cash.

I talked my spouse into real estate investing. The portfolio is a success but the marriage was not. It was a tangle to divide the property because both of our names were on the loans and title, yet we each owned 50% until day of dissolution. If I were to do it again, I would take turns with the loans and holding title, with one spouse per property. This would reduce the risk of having to liquidate, if the investment outlasted the marriage. The closing agent could have spouses sign a paper at purchase time, that the other spouse was aware of the purchase of real property, with marital funds. Family funds would/could pay the loan and the family would enjoy the cash flow, but at break up time, Deeds could be divided without having to sell. Have a lawyer on your real estate team.

Jerel Ehlert · Answer

For lenders to secure their loan against community property (CP), even if separately managed, requires consent of both spouses.  This is why you need your wife to sign off on loan docs and deeds.  Inception of title says the character if the property is set when acquired, with a presumption that all property accumulated during the marriage is CP, regardless of how title is obtained (solely in one spouses name is still CP).

One solution: Form a single-member LLC and have a separate property (SP) agreement between the spouses.  The SP agreement designates all income/expenses, assets/liabilities of the LLC as separate property.  Not too many UW or loan officers are going to dig into an entity.  If necessary, you can get a PoA from the spouse on this.  See below.  The SP agreement and/or PoA will typically satisfy UW and LOs.  If not, probably need to deal with a more sophisticated UW or LO.

Another solution: Statutory durable PoA.  Less likely to be successful, but might do in a pinch.

Guy Gimenez · Answer

1. Always seek legal counsel with legal questions...but here is my opinion as a Texas investor.

2.  The problems don't arise when you purchase, they arise when you wish to dispose of real estate purchased during the course of your marriage. So no, you don't need a spouse to participate in the purchase of real property (with some exceptions), but that property will still be considered community property, and of course will also be considered by the courts in the event of a divorce. This could be a reality if you're already having "issues."

2.  Even purchasing property through an entity or trust, as you stated, may not solve the issue. Business income created during the marriage, as well as the business itself, will likely be considered community property. Separate funds, when commingled, are no long separate funds.

3.  There are too many questions remaining for you to trust a generic responses here on BP...you should absolutely seek legal counsel so that every aspect of your decision can be considered.

Wayne Brooks · Answer

@John B. Form an llc, buy the properties through the llc...no spouse sign off typically required for llc purchases.

Can You Get Property With Your Spouse Sign-Off?

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