Ask the TITLEMAN™ - Sales Price Change; Disclaimer Deed

by John T. Lotardo aka TITLEMAN™
Sr. VP/General Counsel, Stewart Title & Trust of Phoenix, Inc.

Q. I wanted to run something past you. My husband and I recently put an offer in on a house (full price offer). The sellers wanted to do a lease back for 36 days, which we agreed to do at no charge to them. We gave an earnest money deposit of $5000.00, which we thought was fair. Our financing is secure with a letter from our mortgage company to attach to the offer. What happened is this: The sellers have now raised the price by $15K, want a $10K earnest money deposit of which $5000.00 is non-refundable and cannot be contingent on the appraisal coming in on their new asking price. It seems to me there should be some sort of law against this. If you wanted more for your house, then ask for it up front. It seems like home buying is becoming somewhat of an auction nowadays. I know this is something that has been going on in our local real estate market, however there needs to be some guidelines in place for the shyster real estate agents representing buyers and sellers both. Any suggestions?
A. Sorry to hear about your trials in the home buying experience. We are currently in a seller’s market where buyers are feeling the pinch. I assume that the changed terms of the sellers are part of a counter offer to your offer to buy their home. If not, I could not see how they could change the terms mid-stream. You question whether the sellers can counter with different terms from the original listing: the answer is generally yes. I have seen where the price steadily increases during the negotiations. So long as it is not based on some illegal discriminatory basis (i.e., if they raised the price once they discovered you were a member of protected class.) I would caution you about making the money non-refundable and it not being contingent upon the appraisal of the property for the sales price. With rapidly appreciating prices, the seller could retain your deposit if you were not willing to pay the difference between what your lender is willing to lend and the sales price. With that said, only you can decide if this is your “dream home” that you just have to have. Think carefully and good luck.

Q. I would very much appreciate any information you could provide regarding a disclaimer deed on our home. During our marriage, my husband and I purchased a home ‘together.’ He had borrowed the money for the down payment from his family, and I, stupidly, signed the disclaimer deed presented to me because my credit rating was so bad that it stopped us to purchase the home jointly. Several years have passed and we are now headed for a divorce. Having signed that disclaimer deed, do I have any entitlement whatsoever to a portion of the increase in the value of the house since it was purchased? Wouldn’t our sharing of household expenses result at least in the equity increase? However, I never wrote a check to the mortgage company–my husband and I shared the expenses by paying different bills; he paid the mortgage payment and the utilities, and I paid for our children’s daycare and the purchasing of food for our family–and basically everything else. I realize I was foolish and naive to have divided up our expenses in that way. But, were it not for my covering those monthly expenses (that exceeded the cost of the bills he covered I might add!) he would not have been able to make the mortgage and utility payments. Do I have any legal recourse in securing a share in the home’s increase in value? If so, what steps do I need to take to protect any entitlement I would have? Your soonest possible reply to this would be very greatly appreciated by my children and myself. Thank you.
A. You should be speaking with an attorney right away on this one. I understand how unfair it sounds and there is a legal theory, which supports your argument that you are entitled to something. Here in Arizona, the idea of ‘transmutation’ from a sole and separate asset to a community asset is possible. Further, the monies your husband paid may be considered community funds- his daily earnings during the marriage. Take the time to speak to an attorney about how best to handle the issue in the divorce proceedings. Perhaps the two of you can construct an agreement without a battle. Good luck.

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Copyright John T. Lotardo. All rights reserved. John Lotardo (aka the TITLEMAN™) is Senior Vice-President and General Counsel for Stewart Title & Trust of Phoenix, Inc., and State Underwriting Counsel for Stewart Title Guaranty Company. He is a member of the National Advisory Councils for GoGetEscrow.com, GoGetLoan.com, GoGetNotary.com and GoGetRealEstate.com. The information supplied is of a general nature and should not be relied upon as comprehensive legal advice. Please consult with your own local legal counsel. For more about John, visit: www.GoGetEscrow.com/Get/Titleman or www.AskTheTitleman.com.