Language stemming from outdated DC law should be removed from lender’s loan packages

Several mortgage lenders continue to require borrowers to sign a statement at closing as to whether a borrower has a non-borrowing spouse or domestic partner living with the borrower.  

The recitation provided by the lender reads, “Washington, DC law provides that a mortgage, deed of trust, or assignment for the benefit of creditors is not binding or valid unless it is signed by the spouse or domestic partner of the debtor who is living with his or her spouse or domestic partner. Consequently, a non-borrowing domestic partner or spouse may have an ownership interest in the property of the borrowing domestic partner or spouse.  As a result, the Lender will require that both spouses or registered domestic partners sign the security instrument in order to ensure it is fully enforceable.”

The recitation comes from an outdated DC law, and your legal counsel should have it eliminated from the loan package since it creates much confusion among the borrowers at closing.

DC law used to provide:

§ 15-502. Mortgage or other instrument affecting exempt property 

   (a) A mortgage, deed of trust, assignment for the benefit of creditors, or bill of sale upon exempted articles is not binding or valid unless it is signed by the spouse or domestic partner of a debtor who is living with his or her spouse or domestic partner.

This purports to say that these instruments are not valid without a spouse or domestic partner’s signature, but this was an error, and legislation in 2006 corrected it.

In 2006 § 15-502(a) was changed to add the following language at the end:  

“This section shall not apply to instruments related to property exempted in § 15-501(a)(14).”

Under § 15-501 (a)(14), which was also amended in 2006, instruments related to property exempted means deeds of trust, mortgages, mechanics liens, and tax liens related to a debtor’s residence.

The effect of the amendments is to make clear that a spouse or domestic partner’s signature is not required on security instruments. 

In addition, more generally, in 2001, DC abolished dower rights. (DC Law 13-292, Omnibus Trust and Estates Amendment Act of 2000.)