“Joinder” of Married Couples in Arizona in Real Estate and Guaranty Transactions

Christopher McNichol Kent Cammack

Arizona’s community property laws generally categorize marital assets in one of three ways: (i) the marital community property, (ii) one spouse’s sole and separate property, and (iii) the other spouse’s sole and separate property. All property acquired by either spouse during the marriage is presumed to be community property, except that acquired by gift or inheritance. Although pre-marital and other types of agreements between spouses may affect these normal presumptions, in practical effect most couples likely hold most of their assets, certainly those acquired during marriage, as community property.

Spouses have equal management, control, and disposition rights for community property. They also have equal power to obligate the marital community. Stated another way, one spouse alone can contract to sell community property or make a debt for which the couple will be liable. And thus, such a creditor may collect its debt from the community property. 

With two key exceptions.

Arizona’s unique statute creates two broad carve-outs to an individual spouse’s power over community property: (i) real property transactions, and (ii) guaranties, indemnities and suretyship. In those instances, the “joinder” of both spouses is required to bind the community. 

Real Property: By way of example, if a house is owned by a couple as community property, both spouses must sign any documents that transfer, lease (for one year or more), or mortgage the house, i.e., a deed, lease, or deed of trust, respectively. If only one spouse signs, the transaction intended by the document is, in short, ineffective.  

Even if the house is titled in the name of just one spouse as his/her sole and separate property, a title company will be mindful of the presumption that property in the marital relationship could still be deemed community property, and will typically want assurance that the other spouse did not still acquire over time a community property interest. One way of addressing this concern is to require that the other spouse execute and deliver a disclaimer deed, which is essentially that spouse’s contemporaneous assurance that he/she has no ownership interest in the house. 

Guaranty: As to the other exception, if only one spouse signs a guaranty, the creditor may collect only from any of that spouse’s sole and separate property–not from the community property and not from the other spouse’s sole and separate property. Thus, lenders usually seek both spouses’ signatures on guarantees in order to bind all the assets of the couple for repayment. Occasionally, lenders set up a mid-point structure in which the “other” spouse signs only as to his/her interest in the community property, leaving that spouse’s sole and separate property out of the equation.

The application of Arizona’s “joinder” statute can be particularly tricky when dealing with transactions involving couples who reside in other states, or who have pre-marital assets or complex estate structures. As always in the law, such matters are fact specific.