The buyer(s) listed in the contract for sale may be different from the parties who will actually hold title. Often this is seen where only one spouse is on the loan but both spouses are on the title. This may also occur where a parent is buying a house for a child or vice versa. Regardless who is borrowing the money to purchase the house all title owners must attend closing. Despite not “being on the loan” there are certain documents that all owners of the property must sign in order to complete the loan closing.
Many buyers confuse being on the mortgage with being on the note or loan. They are two different matters. You can clarify this with your client by explaining the difference in the three main closing documents. First, the deed or title to real estate is the document that establishes ownership. The promissory note is the borrower’s promise to repay the lender a sum of money. Finally, the mortgage is the document that pledges the property as security for repayment of the note.
Therefore, if your client will be on the title to real estate they must sign the mortgage pledging the property for security for repayment of the note. This holds true regardless if they are “on the loan” or not. The note says “I promise to repay” but the mortgage is the document that creates the security for that promise of repayment. If one of the owners fails to sign the mortgage, the lender may be unable to foreclose their ownership interest in a case of default.
When in doubt contact the closing attorney to ascertain who must come to closing as the attorney is charged with the legal aspects of the closing.
Historical Fact- As we celebrate the 4th of July we look back at the South Carolinians who signed the Declaration of Independence. Thomas Heyward, Jr., Arthur Middleton, Thomas Lynch, Jr. and Edward Rutledge all signed the Declaration.
Heyward was classically educated and elected to the Continental Congress. After signing the Declaration he served as a Judge. He was taken prisoner by the British during the Siege of Charlestown. After his release he resumed his judgeship until he retired in 1798. He died in 1809.
Middleton was born in South Carolina but educated in England. He was elected as a delegate to the Continental Congress. Middleton was also captured by the British in Charlestown and imprisoned for more than a year. He lost most of his fortune during the Revolution. He engaged in politics until his death in 1787.
Lynch was born in South Carolina and studied law in England. Upon his return to America, Lynch became politically engaged and was commissioned as company commander in the First South Carolina regiment. He was elected to a seat in the Continental Congress. After signing the Declaration, he fell ill and retired from Congress. In 1779 he and his wife were lost at sea as they sailed to the West Indies.
Rutledge was born to an aristocratic family in South Carolina. He was educated at Oxford and admitted to the English Bar. He practice law and attended the Continental Congress. He took leave from Congress in 1776 and joined the defense of South Carolina. He engaged in many important battles and attained the rank of Captain. He went back to Congress only to return to the militia again after the third invasion of Charlestown. He was captured and held prisoner until 1781. After the War he returned to the legislature until 1796. He was very active in politics as well as the prosecution of British Loyalist. He served as Governor and died in 1800.
HAVE A SAFE AND HAPPY FOURTH OF JULY!