Underwriting Q & A | When should the term “pro forma” be used in connection with the name of a party on a real estate document?

Q: When should the term “pro forma” be used in connection with the name of a party on a real estate document?

A: The term “pro forma” is a term that literally means as a matter of form or for the sake of form.  In Texas, we see this term used often when we have a spouse signing a deed of trust for the perfection of a valid lien on homestead.

Rather than use the term ‘pro forma’, the better practice is to have the spouse execute the deed of trust “for homestead purposes only”.  The spouse signature is required to create a valid lien, so the requirement goes beyond the mere sake of form.

We occasionally see the use of the term “pro forma” on a Deed, beside the name of a grantee.  This is not an appropriate use of the term and causes confusion as to the vesting of title.  We have to treat the “pro forma” spouse as being in title.  Please make sure that this term is not used on a Deed utilized in your closings.