Legal Question in Real Estate Law in California
Purchasing a Home
Situation: A married couple in CA, one spouse has a good job & good credit. The other married partner is making decent money, is self-employed receiving commissions on large collection of art. Money he has made would be used as down-payment; however, he has very bad credit & owes $80,000+ in student loans. Couple trying to better their lives but bad credit from a decade ago haunting them. Sorry... long story, but short of it is whether the spouse with good credit can buy a house w/o signature of spouse w/bad credit so bad credit won't be a factor. Thanks for any information you can provide.
1 Answer from Attorneys
Re: Purchasing a Home
Legally, a married person is entitled to own separate property. Usually, a lender will require the non-owner spouse to quitclaim to the owner at the time of financing. Find a reputable lender or loan broker to discuss the credit and borrowing aspects. The market is tighter than it was a few years ago, but with some shopping around and a decent down payment, you may find a lender. Expect to need 20% down.
There are some legal aspects to a married couple paying off a loan on a house bought as the separate property of only one. The main one to be aware of is the so-called "pro tanto interest." When community income is used to pay off a loan on Spouse A's separate property, the marital community and hence Spouse B slowly gains an interest in the once completely separate property. The earnings from employment of either spouse during marriage are community property. Therefore, the house will, over the years, develop a community ownership.
The two of you might therefore also want to talk to, in addition to a lender, a credit counselor and a family law attorney.
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