buy real estate as sole and separate property even though it is a community property state

A husband or wife can buy real estate as sole and separate property even though it is a community property state. A husband or wife can freely relinquish their real estate rights or responsibilities legally through a quitclaim deed. There are legitimate reasons for doing this. --If the real estate would be owned by a trust, corporation or partnership where one spouse is not a member. --If one spouse owns a small business and it needs to purchase a piece of real estate. --If one spouse had filed bankruptcy. This is common in second marriage situations where one spouse filed bankruptcy before the second marriage. Often, the only way to get financing is if the non bankrupt spouse purchases the home sole and separate. Sometimes the stay-at-home parent quit-claims to the income-earning spouse the asset and debt, with a consideration paid for exchange. The best story to illustrate this was the lore about the husband who was a real estate investor. He assumed all the risk for his investments To induce his wife to sign the quit claim deeds, he promised her an expensive piece of jewelry of her choosing. Later in life she ended up with a collection of jewels suitable for a queen. He went broke... Conversely, if the loan for the property is in both the name of the husband and wife, the lender will require that the property's title list both husband and wife in their instructions to the escrow company. Nolo defines separate property: In community property states, property owned and controlled entirely by one spouse in a marriage. At divorce, separate property is not divided under the states property division laws, but is kept by the spouse who owns it. Separate property includes all property that a spouse obtained before marriage, through inheritance or as a gift. It also includes any property that is traceable to separate property " for example, cash from the sale of a vintage car owned by one spouse before marriage-and any property that the spouses agree is separate property. Compare community property and equitable distribution. Property owned prior to and brought into a marriage is considered separate property. In order for it to remain 'separate property' it must never be commingled with marital or community property. Once separate property is commingled with marital or community property it becomes community property and cannot be undone. Some states, such as California, have a separate property rule that says that all property brought into a marriage, including gifts and inheritance, which is kept separate and apart from community property remains the separate property of the spouse that owns it. If one spouse enters a marriage with a checking account with a large balance, say $100,000 and both parties deposit to this account and pay bills from it, the protection of separate property is removed and the original $100,000 has become community property. In this case if the marriage were to come to an end the $100,000 would be divided between the parties. Had the account been kept separate from the marriage, the original owner should leave the marriage with the $100,000 intact as separate property. If one spouse enters the marriage already in possession of the home they must have a separate checking account for the management of the separate property. They must be careful not to deposit related funds to or from a community property account. If this is done, the home will most likely be deemed to be community property in the event of a divorce. Anybody concerned with separate property issues should seek the advice of an attorney or a financial professional prior to entering into a relationship. They should then follow their advice.

Recurring vs. Non-recurring Closing Costs

For a buyer, closing costs are everything outside of the purchase price that a buyer pays to complete a real estate transaction.

For a seller, closing costs are all the fees, except liens or encumbrances, that are deducted from the purchase price.
 Some examples of closing costs include documentary transfer tax; city / county transfer or property taxes; inspections; loan fees such as points and prepaid interest.
Costs or expenses in an escrow are classified as either recurring or non-recurring.

 

Recurring Closing Costs

Costs which the party pays at closing but will continue to pay after the escrow closes as the normal cost of maintaining the property.

• Fire Insurance Premium
• Homeowner’s Association Dues
• Real Property Taxes
• Interest on the New Loan

Non-Recurring Closing Costs (NRCC)
Costs which are charged ONE TIME ONLY as an expense of closing the transaction.

Title Company Expenses such as:

• Title Insurance Premiums
• Recording Fees
• Endorsements to Title Policies
• Sub-Escrow Fee which may be due Title Company
• Reconveyance Fees
• Documentary Transfer Tax
• Escrow Fees
• Notary Fees
• Messenger Fees

In the case of a refinance:

• Fees Associated With Making an Existing Loan Payoff
• Transfer or Document Fees to a Homeowner’s Association

Lender’s Costs such as:

• Appraisal
• Credit Report
• Loan Origination
• Loan Processing
• Document Fees
• Tax Service Contract

In the case of a sale:

• Real Estate Broker Commissions
• Fees for Property Disclosures or City Reports
• Transaction Coordinator Fee
• Home Warranty Premium