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MO: Court Finds a Non-Borrower Spouse is not a Grantor

by Charles S. Pullium
Millsap & Singer, P.C. — USFN Member (MO)

The Missouri Supreme Court recently issued an opinion holding that where a property is owned by husband and wife but the deed of trust indicates it is owned by only the husband and the deed of trust names only the husband as the grantor, and the wife simply signs the deed of trust, such signature by the wife is ineffective to convey the co-owner’s interest and grant a lien. In other words, although husband and wife signed the deed of trust, if only the husband signed the note and the deed of trust doesn’t specifically name the wife as a grantor, then the deed of trust is ineffective as to the wife.

Although Missouri is a nonjudicial state, this fact scenario often results in the necessity of a judicial foreclosure to remedy the problem and foreclose the lien. However, in this recent ruling, the court may have significantly reduced the lender’s ability to complete a foreclosure … even in the courts. 

The case went to the Missouri Supreme Court. In a split decision, the majority held:

(1) The lien was invalid because the deed of trust did not convey a valid lien to the lender on the wife’s interest in the property. The deed of trust only designated the husband as “borrower.” The deed notes that he is married but indicates, incorrectly, that title to the property is vested solely in him. Since the wife was not named as a grantor, which the deed defines as “borrower,” she did not convey any interest even though she signed the deed of trust. 

(2) There are no equitable remedies available to the lender by changing the words used in the deed of trust. Said the court, “Under this law, the injustice of slighting Mary Ethridge’s interests at the time of the refinancing now produces an enrichment of wife, who has no obligation to pay her late husband’s loan.”

Lesson: You must provide clear evidence of the intent of a non-borrower to grant a lien or else face problems enforcing your lien in Missouri.

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