• Home
  • Education
  • News and Resources
  • Advocacy
  • Associate Members
  • Contact
  • Search
  • Menu Menu
News
Compliance

Navigating Wisconsin’s Marital Property Act

WBA’s top marital property questions

The Wisconsin Marital Property Act presents unique community property considerations for Wisconsin banks. While nothing has changed in this area of law, its nature gives rise to some frequently asked questions. Below are two of the most commonly received questions through the Wisconsin Bankers Association’s (WBA) Legal Hotline.

Question 1: Is a bank permitted to pull credit on a non-signing spouse?

Answer 1: Yes. When dealing with married Wisconsin residents, a bank is permitted to pull credit on a non-signing spouse and may even be required to do so.

Wisconsin Section 766.56(1) requires creditors to consider all marital property available to satisfy the debt when evaluating a married Wisconsin resident’s application for family purpose credit. Where there is an obligation in the interest of the marriage or family, being a “family purpose” obligation, the creditor must consider all marital property available to satisfy the obligation in the same manner that it considers the availability of property of an unmarried applicant. While the law does not define “family purpose,” the presumption is that an obligation incurred by a spouse during marriage is family purpose. Additionally, income would be presumed to be marital property unless there is a marital property agreement indicating otherwise. Because the Wisconsin Marital Property Act requires creditors to consider all marital property available to satisfy the debt, a bank may be required to do so.

Regulation B Section 1002.5(c)(2) allows the bank to request information about the applicant’s spouse if the applicant resides in a community property state or is relying on property located in such a state as a basis for repayment of the credit requested. As Wisconsin is a community property state, banks are permitted to pull credit on a non-signing spouse.

Question 2: How does the Homestead Rule Affect Mortgages for Married Wisconsin Residents?

Answer 2: Wis. Stat. Section 706.02(1)(f) requires that each spouse with homestead rights must sign the mortgage for it to be valid unless an exception applies. In this context, homestead means the dwelling, and so much of the land surrounding it as is reasonably necessary for use of the dwelling as a home, but not less than one-fourth acre, if available, and not exceeding 40 acres. It is WBA’s understanding that title companies are typically able to provide an indication of whether the property would be considered a homestead under this definition.

Once a bank has determined the pledged property as a homestead, the bank must consider Section 706.02(1)(f). If the mortgage alienates any interest of a married person in a homestead, then each married individual must sign the mortgage in order for it to be valid. The only exceptions to this rule are for conveyances between spouses and for purchase-money mortgages.

Question 3: What is a “Marital Purpose Statement?”

Answer 3: Many software platforms will provide what is called a “marital purpose statement” or otherwise incorporate some type of statement to the fact that an application for a loan is in the interest of the marriage or family. While the use of such a statement depends on the specific statement produced by bank’s software system as well as policy and procedure, there are some general concepts under Wisconsin’s Marital Property Act which help in understanding it.

Per Wis. Stat. section 766.55, an obligation incurred by a spouse during marriage is presumed to be incurred in the interest of the marriage or the family and a statement separately signed by the obligated or incurring spouse at or before the time the obligation is incurred stating that the obligation is or will be incurred in the interest of the marriage or the family is conclusive evidence that the obligation to which the statement refers is an obligation in the interest of the marriage or family.

Because the separately signed marital purpose statement provides conclusive evidence of this fact, WBA generally recommends that when bank is extending credit to a married Wisconsin resident, whether solely or joint credit, that bank should obtain this statement.

Without having such separately signed statement, if the loan were to go into default and bank is seeking to collect against marital assets, bank must first prove that the debt was marital obligation, incurred in the interest of the marriage or family — by bank having such separately signed statement, it is conclusive evidence for the bank to prove this fact.

Question 4: What are the Wisconsin “Tattletale Notice” Requirements?

Answer 4: Wis. Stat. section 766.56(3)(b) requires certain notices be provided to a borrower’s spouse for loans governed by the Wisconsin Consumer Act involving marital property.

More specifically, the requirements apply when a creditor extends credit to a spouse in a credit transaction governed by chs. 421 to 427 and the extension of credit may result in an obligation described under s. 766.55(2)(b). In this, “Tattletale Notices” apply to transactions governed by the Wisconsin Consumer Act, and an obligation incurred by a spouse in the interest of the marriage or the family. A loan transaction that is governed by the Wisconsin Consumer Act is one that is: (1) consumer, family or household purpose; (2) $25,000 or less; and (3) not secured by first lien or equivalent security interest in the borrower’s principal residence.

In such a situation, the lender must provide a copy of the instrument, document, agreement, or contract evidencing the obligation to pay or any required credit disclosure which is given to the applicant spouse, or by providing a separate writing briefly describing the nature of the credit extended.

Question 5: What is a “Spousal Consent to Guaranty?”

Answer 5: Some software providers may make available a spousal consent to guaranty form. For example, WBA and FIPCO have a form created to protect the creditor’s ability to collect on the guaranty from all marital property belonging to the couple. This form is based upon the fact that the Wisconsin Marital Property Act generally limits gifts of marital property to third parties by one spouse acting alone to $1,000 per calendar year unless the spouses act together in making the gift (See: Wis. Stat. Section 766.53.)

While WBA does not necessarily view payments on guaranties as gifts to the third party, in the event a court characterized the payment as a gift, by obtaining the non-guarantor spouse’s consent to the guaranty, the creditor would then not be limited to the $1,000 per calendar year amount.

Additionally, while spouses may act together to make a gift, WBA strongly cautions against requiring the signature of a guarantor’s spouse on the loan. Regulation B prohibits a creditor from requiring the signature of a guarantor’s spouse just as it prohibits requiring the signature of an applicant’s spouse. Thus, a creditor cannot require the guarantor’s spouse to sign the guaranty to protect its interest. Instead, the creditor should obtain the non-guarantor spouse’s consent to the guaranty by execution of a form such as the one described above.

Question 6: What is a “Spousal Consent to UCC Filing?”

Answer 6: The Uniform Commercial Code (UCC) provides rules for perfecting of security agreements. One method of perfecting a security agreement is through the filing of a financing statement. However, as a general matter of the UCC, a creditor can only file a financing statement if authorized by the debtor. In the event that a creditor — such as a bank — does not have such authorization, the filing is not valid, and bank could be penalized. Debtor means a person having an interest in the collateral. Generally, this is a borrower — but it could be a third-party pledgor or include non-signing spouse as well.

Authorization is given when signing the security agreement. Thus, a debtor does not need to give separate authorization because they will sign the security agreement. If the spouse is a “debtor,” and also signs the security agreement, then they have also given authorization and separate authorization is also not necessary. However, if the spouse is a “debtor” and does not sign the security agreement, then separate authorization is required, so the consent is required. In this situation, many software platforms will provide a means to accomplish this through a form such as a “spousal consent to UCC filing/financing statement.”

If you have any additional questions regarding Wisconsin’s Marital Property Act, or any other legal question, please contact WBA’s legal team.

Print 🖨
June 30, 2023/by Hannah Flanders
Tags: Compliance, Legal Q & A
Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share on Tumblr
  • Share on Vk
  • Share on Reddit
  • Share by Mail
https://www.wisbank.com/wp-content/uploads/2023/06/Legal-scaled.jpeg 1707 2560 Hannah Flanders https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Hannah Flanders2023-06-30 11:34:482023-06-30 11:34:48Navigating Wisconsin’s Marital Property Act
You might also like
Triangle BackgroundWelcome Back, Old Friend – Section 8 of RESPA is a Hot Topic Again
Triangle BackgroundUpdate on Consumer Fraud, Including Imposter Scams and Money Mule Schemes
Draft Comment Letter Coming Soon: Section 1071 Dodd-Frank Act Proposal
Triangle BackgroundNew Guide for Community Banks: Conducting Due Diligence on FinTechs
Legal Q&A: Managing Online Stop Payment Orders
Triangle BackgroundScam Warning – IOLTA Accounts
Legal Q&A: How Should Your Bank Approach Contracting With Minors?
Triangle BackgroundAugust 2022 Compliance Journal

Categories

  • Advocacy
  • Community
  • Compliance
  • Credit Unions
  • Education
  • Member News
  • News
  • Products
  • Resources
  • Uncategorized

Recent Posts

  • First National Bank and Trust Company Donates to Whitehall Public Library
  • Nonprofits Win $39,000 at South Central Wisconsin Charity Golf Invitational By First Business Bank
  • Executive Letter: Inspiring a Generation of Future Bankers
  • School Supplies Provided; Kids’ Meals Supported By Prevail Bank
  • Waukesha State Bank Promotes Spanuello

Archives

  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • December 2020
  • November 2020
  • October 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • May 2019
  • April 2019
  • March 2019
  • November 2018
  • September 2018
  • August 2018
  • June 2018
  • April 2018
  • March 2018
  • January 2018
  • November 2017
  • October 2017
  • September 2017
  • May 2017
  • April 2017
  • December 2016
  • November 2016
  • August 2016
WBA logo
  • About
  • Community
  • Subsidiaries
  • Staff

questions@wisbank.com

608-441-1200

4721 S Biltmore Ln.
Madison, WI 53718

Get our Newsletter!
Subscribe

© 2023 Wisconsin Bankers Association. All rights reserved. | Website Design by Bizzy Bizzy
Bank First Announces New Hire and Recent PromotionsTriangle BackgroundMound City Bank Promotes Pickel
Scroll to top

This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.

OKLearn more×

Cookie and Privacy Settings



How we use cookies

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

Essential Website Cookies

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

Other external services

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

Privacy Policy

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

Terms of Use
Accept settingsHide notification only

Subscribe

* indicates required








Membership