Legal Question in Real Estate Law in California

Lender policies will differ on this; I think that many would require, at minimum, that your wife execute a quitclaim deed whereby she transfers her interest in the property to you.

"Her interest?" you may ask.........."I am the sole owner." Sure, that's what the papers recorded down at the County Recorder say. However, remember that California is a community-property state. All your paychecks, and all of hers, belong to the community. That's basically to say that the earnings of a married couple are jointly owned, regardless of whose name is on the paycheck.

Now, when you use those community earnings from your paycheck to make mortgage payments, which are (generally, at least) part interest and part principal, those portions which are principal are building equity in the house which belongs to the marital community.

Bit by bit, the non-owning spouse acquires a sliver of ownership due to the payment of the principal balance with community funds. This is called a "pro tanto interest" and is calculated upon death or divorce by use of the so-called Moore/Marsden formula. The concept is most fully developed in the case of In re Marriage of Marsden (1982) 130 Cal.App.3d 426, which you can find and read (via Justia or FindLaw, I think) on Google.

If you Google terms like "pro tanto interest" "Moore/Marsden formula" etc., you will also find interesting reading on the subject.

Signing a quitclaim flushed out the pro-tanto interest your wife may be accruing, at least as of the date of the quitclaim, restores 100% of ownership to you, and allows the lender to lend to you as a "true" sole owner, as opposed to a sole owner "of record." The record at the courthouse ain't always right!

Most lenders that I am familiar with will want her to sign a quitclaim deed, disavowing any interest she may claim in the property.