Legal Question in Real Estate Law in Virginia

Is it legal for one owner of a joint ownership property to take out a mortgage on the property without the other owner's consent?

Asked on 7/16/19, 2:51 pm

1 Answer from Attorneys

Jonathon Moseley Jonathon A. Moseley

Well, no.

But you have to be specific about what you mean by "legal."

Typically, NO responsible mortgage company will ever complete a mortgage transaction without all the owners of the property signing off on it. To avoid any legal issues, it would be shocking if a mortgage company would lend money without all the owners signing off on it.

If the mortgage company did that, they would have very serious problems enforcing the mortgage. They could not foreclose. They could take over the other owner's half of the property. But they could not sell the property to get their money back.

It also matters what you mean by "joint ownership."

There are different types.

There are co-tenants in which 2 or more people share ownership in equal but undifferentiated shares. So one person owns half, but no particular half specifically. Just half in the abstract, conceptually.

In that case, one of the owners can sell his or her share. But the other owners would continue to own their share. They would now own the property jointly with the new co-owner even if it is a mortgage company.

So if the co-owner sells or mortgages his or her share, it would not affect the other co-owners of the property. And that is why the mortgage company would not be able to sell the house and could not foreclose.

Husbands and wives often own property as "tenants by the entirety with rights of survivorship." In that case, it is legally impossible to do anything with the real estate without the signature of both spouses. Any action of any kind would be void without both signatures.

However, it is not strictly "illegal" for a joint owner to take out a mortgage on the property alone. There is nothing that makes that an illegal action.

It is just that it might not work for the mortgage company, so no mortgage company with any sense would ever do it.

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Answered on 7/25/19, 5:27 am

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