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I disagree since i interpret this part of section 121 to imply that the spouse is also deemed to own the house.  

this provision allows a married couple to claim a $500,000 exclusion even if only one is on the title.

if this weren't the case then wouldn't it be possible for H to sell a house only he owns and W to sell a house 

only she owns and claim $500,000 on both even though they're both sold the same year. 
(1)Joint returns
If a husband and wife make a joint return for the taxable year of the sale or exchange of the property, subsections (a) and (c) shall apply if either spouse meets the ownership and use requirements of subsection (a) with respect to such property.

 

more important, I think their situation is complicated that they should get pro advice. for example, they may qualify for under one of the partial exclusion exceptions which then might allow joint filing and with no need to amend the prior return to eliminate the claimed exclusion which will not only cost them taxes but penalties and interest.