Legal Question in Real Estate Law in Texas

Deed of Trust to Secure Assumption

In our divorce settlement my husband and I will soon split 30 rental properties. They all have non-assumeble 5 year term bank loans and the deeds of trust are in joint names. I am fearful that when I no longer have ownership interest in his half and he dies, my stepson would inherit them and mismanage them. He can't even balance his checkbook! I can just see them go into foreclosure and I would not be able to do anything about it plus my credit would be ruined.

My attorney said he could look into getting deeds of trust to secure assumption to protect me in this situation. From a Realtor, I just learned that she is of the understanding that these Deeds of Trust to secure assumption are only applicable on VA and FHA assumeable loans, which is not what we have. Can anyone give me more information on this issue? I do not think I can force him to liquidate the properties and it is too expensive to obtain new loans on all the them and our banker is refusing to budge on removing either of our names from the present DOTs.

Help, please.

Very worried in Houston


Asked on 5/16/04, 10:14 pm

1 Answer from Attorneys
Joseph A. McDermott, III Attorney at Law

Re: Deed of Trust to Secure Assumption

First, I'd like to know the name of your broker (please don't capitalize realtor; it lends an undeserved gravity to the "profession"). She needs to be reported ot the State Bar unauthorized practice of law committee. As far as the DoT to secure assumption, it's a common device in divorces and seems appropriate to your situation. One caveat: make sure your banker understands that you are splitting these properties in your divorce, and that your and your husband's conveyances of interests in specific properties to one another does not trigger the due on sale clauses in the existing deeds of trust. Preferably get the banker to confirm this in writing.

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Answered on 5/19/04, 12:34 pm


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