If Maryland spouses jointly own a house, does a lender need both signatures to use the house as loan collateral?

Plain-English summary

The Deputy Bank Commissioner asked the Attorney General when Maryland law requires a second signature on a loan instrument so that a judgment creditor can reach property owned by the debtor along with another person, a question raised by the National Credit Union Administration's concern that credit unions might be violating the federal Equal Credit Opportunity Act by requiring a spouse's signature. Federal law and Regulation B allow a lender to require a spouse's or other co-owner's signature on whatever instrument state law makes necessary to reach that property in case of default. The opinion concluded that Maryland law does not require any additional signature to reach property owned solely by the borrower, or to reach a joint tenant's or tenant in common's individual share of jointly held property, but that a lender does need both spouses' signatures on the mortgage itself, though not necessarily on the underlying note, to reach property that a husband and wife hold together as tenants by the entireties, because Maryland shields entireties property from the separate debts of just one spouse.

Currency note

This opinion was issued in 1982. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The opinion applied the federal Equal Credit Opportunity Act, Regulation B, and Maryland property and commercial law as they stood in 1982. Maryland's tenancy-by-the-entireties protections, its commercial law provisions governing security interests, and federal fair-lending regulations have all had decades to change since then. Anyone researching what signatures a lender needs today to reach jointly owned property should verify the current statutes and regulations rather than relying on this opinion's 1982 analysis.

Common questions

Did a Maryland lender in 1982 need a spouse's signature to use property owned solely by the borrower as loan security?
No. The opinion found that a person who individually owns property has the right to encumber it as security for a debt without another signature, since Maryland had already abolished the old dower and curtesy rights that once constrained a married person from conveying individually-owned property alone.

What if a husband and wife owned the property together as tenants by the entireties?
Then a second signature was required. The opinion explained that entireties property cannot be reached to satisfy the separate debt of just one spouse, so a lender needed both spouses to sign the mortgage or deed of trust to validly encumber entireties real property, although the opinion found a spouse's signature was not required on the underlying promissory note itself, only on the mortgage, and found that a security agreement covering entireties personal property needed both spouses' signatures under Maryland common law.

What about property owned by unmarried co-owners, like joint tenants or tenants in common?
The opinion concluded that a joint tenant or tenant in common could mortgage or otherwise encumber his or her own individual interest in the property without the other co-owner's signature or consent, though of course no co-owner could unilaterally encumber more than his or her own share.

Why did the National Credit Union Administration raise this issue in the first place?
The federal Equal Credit Opportunity Act generally bars creditors from discriminating based on marital status, but it and Regulation B specifically permit a lender to require a spouse's or other co-owner's signature when state law makes that signature necessary to reach the property being relied on for creditworthiness or offered as collateral. The Commissioner needed to know exactly when Maryland law imposed that requirement so credit unions could apply the federal rule correctly.

Background and statutory framework

The federal Equal Credit Opportunity Act generally prohibits a creditor from discriminating against a credit applicant based on sex or marital status, but it carves out an exception allowing a creditor to request both spouses' signatures where necessary to create a valid lien, pass clear title, waive inchoate property rights, or assign earnings. Regulation B implements this by permitting a lender to require the signature of an applicant's spouse or other co-owner on whatever instrument state law makes necessary, or reasonably believed necessary, to make relied-upon or offered property available to satisfy the debt in default, whether the credit is unsecured or secured.

Applying Maryland property law, the opinion first addressed individually-owned property, finding that Maryland's general rule (that a person of sound mind may dispose of his own property in any lawful manner) and the abolition of dower and curtesy meant no additional signature was needed to make solely-owned property available to a creditor. Turning to jointly-owned property, the opinion explained that when property passes to a husband and wife, Maryland law presumes a tenancy by the entireties absent a clearly expressed contrary intent, and that entireties property, whether real or personal, cannot be charged with the separate debt of either spouse alone; only a joint judgment against both spouses can create a lien on it. Because of this protection, the opinion concluded a lender needs both spouses' signatures on the mortgage or deed of trust to encumber entireties real property, since one spouse cannot unilaterally grant a valid mortgage on it, though the opinion found (relying on a Maryland mortgage-law treatise) that the underlying note or contract does not itself need both signatures once both spouses have signed the mortgage. For entireties personal property, the opinion looked to Maryland common law rather than the Uniform Commercial Code and concluded both spouses' signatures on the security agreement are needed to bind the property.

Finally, addressing joint tenancies and tenancies in common, the opinion concluded that any one co-owner may mortgage or otherwise encumber his or her own individual interest, whether in real or personal property, without needing the other co-owners' signatures or consent, since a co-owner obviously cannot encumber more than his own share regardless.

Citations

Statutes:

• Federal Equal Credit Opportunity Act, 15 U.S.C.A. §§1691 through 1691f
• 15 U.S.C.A. §1691(a)
• 15 U.S.C.A. §1691d(a)
• Regulation B, 12 C.F.R. §202.7(d) (1981)
• 12 C.F.R. §202.7(d)(2)
• 12 C.F.R. §202.7(d)(4)
• Estates and Trusts Article, §3-202
• Real Property Article, §§1-101(c), 4-101(a), 5-101, and 5-103
• Commercial Law Article, §9-203
• Commercial Law Article, §1-103
• Article III, §43 of the Maryland Constitution
• Article 45, §1 of the Maryland Code

Cases:

• William v. Robinson, 183 Md. 117, 122 (1944)
• M. Lit, Inc. v. Berger, 225 Md. 241 (1961)
• Masterman v. Masterman, 129 Md. 167 (1916)
• Whitelock v. Whitelock, 156 Md. 115 (1928)
• Brewer v. Bowersox, 92 Md. 567 (1901)
• State v. Friedman, 283 Md. 701 (1978)
• Annapolis Banking and Trust Co. v. Nelson, 164 Md. 8 (1932)
• Hertz v. Mills, 166 Md. 492 (1934)
• Lake v. Callis, 202 Md. 581 (1952)
• Ades v. Caplin, 132 Md. 66 (1918)
• Boyd v. Goldstein, 223 Md. 255 (1960)
• Barrell v. Glover, 2 Gill 171 (1844)
• Dougherty v. McColgan, 6 G. and J. 275 (1834)
• Eder v. Rothamel, 202 Md. 189 (1952)
• Reinicker v. Smith, 2 H. and J. 421 (1806)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1982/Volume67_1982.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Credit Regulation—Equal Credit Opportunity Act—Credit Unions—Jointly/Individually-Owned Property—Signatures Required to Make Property Available to Satisfy Debt

February 18, 1982

Mr. Charles R. Georgius
Deputy Bank Commissioner

You have requested our opinion on when Maryland law would require a second signature on a loan instrument to preserve a judgment creditor's ability to satisfy the debt from property owned by the debtor and another person. Your inquiry stems from a communication you received from the National Credit Union Administration (the "NCUA") concerning possible violations by credit unions of the Federal Equal Credit Opportunity Act (15 U.S.C.A. §§1691 through 1691f) and Regulation B of the Federal Reserve Board (12 C.F.R. §202.7(d) (1981)), which prohibit lenders, under certain circumstances, from seeking the signature of a debtor's spouse or other persons on a loan instrument.

I
Background

A. Equal Credit Opportunity Act.

Under 15 U.S.C.A. §1691(a), it is unlawful for a creditor to discriminate against a credit applicant on the basis of such factors as sex or marital status. However, §1691d(a) provides that:

"A request for the signature of both parties to a marriage for the purpose of creating a valid lien, passing clear title, waiving inchoate rights to property, or assigning earnings, shall not constitute discrimination under this subchapter: Provided, however, That this provision shall not be construed to permit a creditor to take sex or marital status into account in connection with the evaluation of creditworthiness of any applicant."

Regulation B implements the federal statute. It states in relevant part that:

"If an applicant requests unsecured credit and relies in part upon property to establish creditworthiness, a creditor may consider State law; the form of ownership of the property; its susceptibility to attachment, execution, severance, and partition; and other factors that may affect the value to the creditor of the applicant's interest in the property. If necessary to satisfy the creditor's standards of creditworthiness, the creditor may require the signature of the applicant's spouse or other person on any instrument necessary, or reasonably believed by the creditor to be necessary, under applicable State law to make the property relied upon available to satisfy the debt in the event of default." 12 C.F.R. §202.7(d)(2) (emphasis added).

Regulation B further states that:

"If an applicant requests secured credit, a creditor may require the signature of the applicant's spouse or other person on any instrument necessary, or reasonably believed by the creditor to be necessary, under applicable State law to make the property being offered as security available to satisfy the debt in the event of default, for example, any instrument to create a valid lien, pass clear title, waive inchoate rights, or assign earnings." 12 C.F.R. §202.7(d)(4) (emphasis added).

B. Questions Presented

The NCUA specifically has asked what signatures would be required under Maryland law to secure a loan in the following situations:

(1) An applicant who is the sole owner of either real or personal property requests unsecured credit and wishes to rely in part on that property to establish creditworthiness. Under the creditor's standards, this would require making the property available to satisfy the debt in the case of default. Would the signature of a person other than the debtor be necessary to make the property available and, if so, on what kind of instrument?

(2) The same facts and question as in (1), except that the property is jointly owned with the applicant's spouse or some other person.

(3) A sole owner of real or personal property wishes to make that property available as collateral for a secured loan. Would any other party's signature be needed to make that property so available and, if so, on what kind of instrument?

(4) The same facts and question as in (3), except that the property is jointly owned with the applicant's spouse or some other person.

Questions (1) and (3) will be dealt with summarily in Part II of this Opinion. We will then respond to questions (2) and (4) in Part III below.

II
Individually-Owned Property

The general rule is that "the law concedes to every person of sound mind the right to dispose of his property in any lawful manner that he may deem proper". William v. Robinson, 183 Md. 117, 122 (1944). Although, formerly, a spouse's right to dower or curtesy constrained a married person from individually conveying property, even if not jointly owned, dower and curtesy have now been abolished in Maryland. Estates and Trusts Article, §3-202.

Therefore, a person who owns property individually has the right to subject it to encumbrances in any lawful fashion that he or she desires, including conveying it to a lender as security for a debt. It follows that State law would not require another signature to preserve a creditor's rights against the property under the circumstances outlined in questions (1) and (3) above.

III
Jointly-Owned Property

A. Tenants by the Entireties

Under Maryland law, when property is transferred to a husband and wife, a tenancy by the entireties is created, unless an intention to the contrary is clearly expressed. M. Lit, Inc. v. Berger, 225 Md. 241 (1961); Masterman v. Masterman, 129 Md. 167 (1916). This general rule applies to transfers of both personal and real property. M. Lit, Inc. v. Berger, supra; Whitelock v. Whitelock, 156 Md. 115 (1928); Brewer v. Bowersox, 92 Md. 567 (1901).

Property held by a husband and wife as tenants by the entireties cannot be charged with the separate debt or obligation of either spouse. State v. Friedman, 283 Md. 701 (1978); Annapolis Banking and Trust Co. v. Nelson, 164 Md. 8 (1932). See also Article III, §43 of the Maryland Constitution; Article 45, §1 of the Maryland Code. Moreover, during the joint lives of the spouses, a judgment against one spouse cannot create a lien on the entireties property. State v. Friedman, supra; Hertz v. Mills, 166 Md. 492 (1934). If the husband and wife are jointly obligated to a creditor, however, the creditor may impose a lien on the entireties property if the creditor reduces its claim to a joint judgment against the husband and wife. Lake v. Callis, 202 Md. 581 (1952); Ades v. Caplin, 132 Md. 66 (1918).

From the above, it is apparent that it would be necessary for a lender to obtain the signature of both spouses on the promissory note or other debt instrument in order to make the entireties property available to satisfy the debt in the event of default.

Moreover, for real property held as tenants by the entireties to become security for a loan, both the husband and wife must consent to the encumbrance of the property, because one spouse acting unilaterally cannot give a valid mortgage or deed of trust on that property. Masterman v. Masterman, 129 Md. 167 (1916). Therefore, the instrument that creates the mortgage lien must be executed and acknowledged by both the husband and wife. See Real Property Article, §§1-101(c), 4-101(a), 5-101, and 5-103.

It would not be necessary, however, for a spouse to sign the note that is secured by the mortgage in order to encumber the entireties property. As one commentator on the Maryland law of mortgages has stated:

"No note or other collateral paper is necessary to the validity of the mortgage debt. The mortgage instrument is enforceable without such paper. But where the mortgage does not contain a covenant by the mortgagor to pay the mortgage debt and where there is no collateral note, bond, or other instrument which is secured by the mortgage, a personal action cannot be maintained against the mortgagor but the property alone is charged with the lien and must be looked to [to] satisfy the mortgage. A personal action may be maintained against the mortgagor where there is a collateral note, bond or other instrument." Ginsberg and Ginsberg, Mortgages and Other Liens in Maryland 116 (1936) (footnotes omitted).

See also Boyd v. Goldstein, 223 Md. 255 (1960); Barrell v. Glover, 2 Gill 171 (1844); Dougherty v. McColgan, 6 G. and J. 275 (1834).

Therefore, a spouse's signature is not needed on an underlying note or contract in order to give the creditor a security interest in the real property held as tenants by the entireties, if both spouses' signatures appear on the mortgage.1

As to personal property, security interests in personal property are enforceable only if a proper security agreement is signed by the "debtor", unless the secured party has possession of the collateral. Commercial Law Article, §9-203. The question of whether the signatures of both husband and wife are required to create an enforceable security interest in entireties personal property is not governed by the Uniform Commercial Code, but instead by the common law. White and Summers, Uniform Commercial Code 913 (2nd Ed. 1980). See also Commercial Law Article, §1-103.

Thus, it appears that the common law of Maryland, under which no entireties property may become security for a debt without the signature of both spouses, requires that the security agreement be signed by both the husband and wife in order for the property to be available to a judgment creditor.2

1 See Mitchell & Hudson, Equal Credit Quandry: Whether a Bank May Require Spouse's Signature as a Condition to Making a Loan, Maryland Banking Quarterly (Fall 1978) 2, 7: "Although Maryland appellate courts have not addressed in a reported decision the precise question of whether a mortgage or deed of trust on real property is valid and enforceable in the absence of a supporting debt instrument signed by the party granting the security interest, other authorities have generally agreed that a loan to one spouse at the request of both spouses is sufficient consideration to support a mortgage by both spouses."

B. Joint Tenancy and Tenancy in Common

A joint tenant may mortgage his or her own interest without the consent of the other joint tenant(s). Eder v. Rothamel, 202 Md. 189 (1952); Ginsberg and Ginsberg, supra, at 27. Of course, a joint tenant cannot unilaterally encumber more than his or her own interest in the joint property.

The above rules apply as well to a tenant in common who wishes to mortgage his or her interest in the common property. Reinicker v. Smith, 2 H. and J. 421 (1806); Ginsberg and Ginsberg, supra, at 27.

It also would appear that a joint tenant or a tenant in common could create a valid lien on his or her individual interest in personal property by his or her sole signature on the security agreement. Similarly, as for unsecured loans, joint tenants and tenants in common can make their interests in the property available to satisfy the debt in the case of default without the consent or participation of any other co-tenant.

IV
Conclusion

In summary, it is our opinion that State law does not require a lender to obtain a spouse's signature on a loan instrument in order to make individually-owned property available to a judgment creditor. A second signature would be required, however, to make entireties property available in the event of default on an obligation of one spouse. As to property held jointly or in common, an individual's interest in the property could be available to satisfy his or her individual obligation without the co-tenant's signature, but the co-tenant's signature would be necessary in order to make the entire property available for satisfaction of a debt.

2 See Mitchell & Hudson, Equal Credit Quandry: Whether a Bank May Require a Spouse's Signature as a Condition to Making a Loan, Maryland Banking Quarterly (Fall 1978) 2, 5: "If the property relied upon is owned by the applicant and non-applicant spouse as tenants by the entireties, however, Maryland law would not permit the judgment-creditor of only one of the owners to subject the property to severance or partition, and thus the creditor would be unable to execute absent the spouse's signature."

Stephen H. Sachs, Attorney General
Bonnie A. Travieso, Assistant Attorney General
Avery Aisenstark
Principal Counsel,
Opinions and Advice