1. Title vs. Mortgage: The Key Distinction
Owning a home and being on a mortgage are two different things.
- Title (Deed): Shows who legally owns the property.
- Mortgage/Deed of Trust: Creates the loan obligation secured by the home.
In California, one spouse or partner can hold title even if they aren’t a borrower on the loan, and vice versa. However, during foreclosure, lenders only pursue the parties named on the loan documents.
2. Spouses and Community Property Rules
California is a community property state (Cal. Fam. Code § 760). That means property acquired during marriage is generally owned 50/50—even if only one spouse is listed on the title. Still, if only one spouse signed the mortgage, only that person is personally liable for repayment. If the home goes into foreclosure, both spouses may lose ownership, but only the borrower’s credit is directly affected.
3. When a Co-Borrower Is Missing From Title
Sometimes both partners sign the loan, but only one is listed on the deed. This can create problems later, especially after divorce or death. To correct ownership, you may need to:
- Record a Grant Deed adding the missing borrower to title.
- Update your estate plan to ensure property rights transfer correctly.
- Notify the lender of any title changes to avoid confusion in foreclosure or payoff.
4. Surviving Spouse Rights
If the borrowing spouse dies, the surviving spouse has protections under federal law. The Consumer Financial Protection Bureau’s 2018 rule (12 C.F.R. § 1026.20(b)) requires lenders to review assumption requests from surviving spouses. This means the non-borrowing spouse can:
- Apply to assume the mortgage, keeping the same loan terms.
- Continue making payments to prevent foreclosure.
Lenders must evaluate the request before proceeding with foreclosure.
5. During Foreclosure
If you’re on title but not the loan, you’ll receive official foreclosure notices but aren’t personally liable for the debt. Still, once the sale occurs, ownership transfers to the buyer or lender—ending your rights to the property. To protect your interests:
- Keep all foreclosure notices, even if addressed to someone else.
- Contact the trustee directly to verify the sale status.
- Consult an attorney before signing any quitclaim deed or settlement.
Titles, loans, and ownership can be messy—but understanding where you stand keeps you in control. Whether you’re a co-borrower, spouse, or heir, California law gives you ways to protect your rights before, during, and after foreclosure.
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