So, if there is no clear demand for an installment repayment schedule, we save the customer money by not requiring the note to be created, executed or filed. Otherwise, it is a superfluous document and not required in our closings. If it does, we know that the title company will require its recording. We ask the title company if the decree or any executed (or to be executed) document like the Owelty Deed of Trust or the Special Warranty Deed with Encumbrance for Owelty of Partition cites a Real Estate Lien Note. And, if it is, then the lender and title company will want the Owelty Real Estate Lien Note to be filed of record. Such note may, in fact, be created in a divorce settlement. The Owelty interest can be created without a lien note. It is merely the repayment scheme to which parties may agree. It is not required in partitioning the property or defining one-half undivided interest. It has nothing to do with the existential nature of the Owelty. It was as if, the note was anticipated, established and then, the Owelty of Partition lien grew out of that.īe that as it may, the Owelty Real Estate Lien Note is not necessary in establishing or perfecting the Owelty lien. I developed this theory several years ago when I noticed more than one template language Owelty provision which began with the creation of the Lien Note.
TEXAS OWELY AGREEMENT HOW TO
Hardly anyone financed them, knew that they could be financed or knew how to structure such financing without triggering the new Texas Home Equity restrictions and legal provisions – which, if you remember, scared scores of lenders which promptly ceased doing business in Texas and gradually trickled back in. I think that the widespread belief was that Owelty liens were for the security to create an installment payment schedule first and foremost (when cash funds were not available). Only since H is willing to wait is there not some demand for the money in lump sum or at least in installment payments over an acceptably short period of time. Of course, don’t get me started on the problems which would have to include the question of who knows if and how the wife might pay in the future…it is, after all, supremely important that these pieces of white paper get turned into actual green money?īut, for our purposes in discussing the real estate lien note, do you see the common assumption that wife cannot borrow the money in a refinance transaction. Accordingly, the court awards the property to W, divests H, and grants H an owelty lien for $150k. H is willing to wait that long for his money but wants security for the obligation. W currently has no money to buy H’s $150k share but expects to have the money in about two years. W wants to keep the house, and H is willing to let her have it.
TEXAS OWELY AGREEMENT FREE
At the time of the divorce, it is worth $300k and is free and clear. This sentiment is expressed in the following discussion question written by an attorney many years ago in his lesson on Owelty liens: "H and W acquire homestead while married. It was assumed, therefore, that if a paying party did not have the cash and the receiving party did not want to wait for payment, an installment payment schedule had to be created. So, there was some confusion and a lot more ignorance about exactly how these Owelty liens might be financed. To complicate matters, equity financing (as we know it) was not possible in Texas before 1998, the same year that the Owelty lien was provided as a valid lien on a homestead property in the Texas Constitution.
And - here’s the kicker – hardly anyone knew how to properly finance these buyouts. The parties might agree, for example, on a $50,000 buyout but the “buyer” did not have $50,000 or if they did, it was committed elsewhere (retirement, emergency, life savings, etc.).
Back in the day (the exact calendar date depends on how old you are but I’m thinking sometime before I came along in 2002 with my Divorce-Lending Specialty) divorcing parties for the most part agreed to buyouts in amounts which often were not readily liquid for cash payment. Here’s my theory – totally based on experience not science or even research – about the Owelty Note (or the Owelty Real Estate Lien Note). The Special Warranty Deed with Encumbrance for Owelty of Partition Here are the Tools in the Owelty Documents Tool Kit
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