Most people have never heard of a Texas Owelty Lien. And hopefully, most people will never need one! However, if you do, we can certainly help you with this difficult task.
“Owelty” means equality, and Owelty liens are used when property needs to be split, such as in a divorce or multiple-person inheritance where one party wishes to sell their ownership of the property to the remaining beneficiaries.
What is an Owelty Deed?
Owelty deeds allow the owner of a home to utilize the equity they have in the home to help with dividing up their property. This action is commonly utilized in divorces or in “buying out” one party’s interest in a property recently inherited by multiple people.
This solution allows one person to obtain a full interest in the home while providing the other person with cash.
How Does an Owelty Lien Function?
In a situation such as a divorce, this option can provide the party not staying in the home with cash for his or her own use.
Under Texas Equity Law, without an Owelty, the parties would be limited to cashing in on equity only up to 80% of the value of the property.
Requirements for Obtaining an Owelty Lien
According to Texas Law, any documents used to create the Owelty, such as a divorce decree, must be drawn correctly. There are also FNMA and investor-specific requirements. These requirements include that the person obtaining the refinance and paying off the Owelty must qualify for the refinance of the property on his or her own.
There may be increased scrutiny resulting in pricing increases, based on the presence of any other type of lien on the property, such as tax liens, mechanics’ liens, and loans entirely used for home improvement but taken out after the purchase of the property. The property must have been jointly owned by the parties for at least 12 months prior to applying to refinance. The borrower may not receive any cash in hand from closing.
How Do I Qualify for a Mortgage Utilizing an Owelty Lien with The Leesa Sandoval Team?
Please feel free to reach out at lsandoval@cmghomeloans.com or at 972-725-9110. We are here for you should you encounter this difficult situation.
The above content is for informational purposes only and should not be used as a substitute for consultation with a financial, accounting, tax, legal or another professional advisor. Please consult a legal advisor for further information regarding Texas Owelty liens.