H.E. Double L for me

6 May 2021

Sorry to barge in like this. This is a snippet from Dolly Parton’s famous song D.I.V.O.R.C.E. It was unfortunately true for one of our clients. Her marriage ended almost a decade ago and the former spouse obstructed about anything you can think of on the road to settlement of assets and liabilities.

One of the larger parts of the estate was the house. The then couple used a mortgage loan to buy it. When the estate was split our client was to take the other halves of both the house and the remaining mortgage and pay the difference to the former spouse. That seems straightforward but that was not the case. Six months ago a court decision was necessary to compel the former spouse to deliver his part, signing the estate split agreement. Remember the 1989 movie “The War of the Roses”? Close. 

Our role was to arrange agreement with the bank that our client could continue the loan by herself. The process was not difficult as the client has ample income to support mortgage payment in full, but it still takes processing time. It is not as extensive as applying for a new mortgage loan but unfortunately most of the assessment is the same.

We received the offer and discussed it with the client. The bank had inserted a clause referring to the deed in which the client will continue the loan on her own.

Under normal circumstances such deed is signed by the two original borrowers. This has to do with the bank’s Duty of Care towards the ex-partner. In this case there was no hope for that second signature. The court’s instruction in the estate split agreement convinced the bank the second signature was not necessary.

All is well that ends well. But divorce life events can make things very messy. Not all banks require two signatures for the deed mentioned above. But some do and then you do not want to be surprised. If you consider breaking up, please consult a mortgage adviser first to see if certain steps need preparation.

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