If my wife of one year wishes to refinance her home, does this make me responsible for the loan?

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If my wife of one year wishes to refinance her home, does this make me responsible for the loan?

My new wife wishes to refinance her house. She has it in a trust and has been told she has to remove it from the trust to refinance. She has been told she needs a quit claim from me to return it to the trust. Will this refinance cause me to be responsible for the loan on the property?

Asked on June 25, 2012 under Real Estate Law, California

Answers:

Cameron Norris, Esq. / Law Office of Gary W. Norris

Answered 10 years ago | Contributor

In short, yes.  California is a community property state.  In community property states, most debts incurred by either spouse during the marriage are owed by the "community" (the couple), even if only one spouse signed the paperwork for a debt. The key here is during the marriage.  The other aspect of refinancing is that if it is done in both of your names, placing both of you on title, the house would become a community property asset.  Right now (if I understand correctly) the house was hers alone coming into the marriage.  So, the house is her separate property and you have no right to it.  If she refinances and places you on title, then it becomes community property.  However, if you two were to ever divorce she would be entitled to reimbursement for the equity amount she had at the time of refinancing.  So, you get a big asset added to the community "column" so-to-speak, but yes you also become liable on the loan.  Probably not a bad deal for you in the end.


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