Adding a name to the title of a house gives that person ownership rights to your home. If your home is owned free and clear, then you'll just need to complete a new deed in both names that will replace the current deed. If the home has a mortgage, you'll need permission from the lender before you make any changes to your title.
If There Is a Mortgage
Contact the lender to see if it's possible to add a name without adding them to the mortgage. A change in ownership could trigger the due-on-sale clause, which means the lender can call the entire mortgage balance due immediately.
If you can't add a name to the title, you'll need to refinance the loan to pay off the current mortgage. Some lenders will allow you to add a person to the deed that isn't on the mortgage, but requirements vary. The lender may require both names on the mortgage. If you're applying with the other person, the lender will look at each borrower's credit score and debt-to-income ratio. If she has has poor credit or a large amount of debt, that could make refinancing difficult. Before shopping around for loans, check your credit reports and dispute any errors or discrepancies that could affect your credit score. Try to limit the rate shopping to a 30-day window to minimize the impact of the inquiries. After the mortgage application is approved, a new deed is created in both names as part of the closing process. However, the lender still holds the title to the home. Once you've satisfied the mortgage, the lender releases the lien and transfers the title into both names as they appear on the deed.
If you own the home outright, you can add a name by completing a quitclaim deed. If you're adding a spouse, you may want to use an interspousal transfer deed to help avoid transfer taxes assessed in some counties. The requirements for completing quitclaim deeds vary by state and even counties. However, the general process is the same. You'll need to complete the form as the grantor, or the person giving up his interest. The grantee -- the person receiving the interest -- is the other party you're adding to the deed. If you don't want to give up all of your interest, you'll also be listed as a grantee on the new deed. Sign the deed in front of a notary. Certain states may require additional witnesses. The guidelines for recording deeds also differ among states. Not all states require you to record the deed, but it's recommended to record it for safekeeping. If any money was exchanged for interest in the home, you may be charged a transfer tax on the amount.
If you're adding someone other than a spouse to your deed, it could be classified as a gift and may result in tax implications.
Ways to Hold the Title
The way the names appear on the title affects ownership interest and how the property is transferred upon a co-owner's death.
- Joint Tenancy means two or more individuals own the home together. An owner's interest automatically passes to the surviving owner(s) upon death.
- Tenants in Common allows two or more individuals to each** **have a separate, undivided interest in the home. There are no survivorship rights, so the owners can designate beneficiaries to receive their shares of the home upon death. If there are no designated beneficiaries in the will, the court determines which of the decedent's heirs receive the share of the home based on the state's laws.
- Community Property is a form of** **joint tenancy only available to married couples in community property states. Each spouse owns half the home and can will their shares to anyone they choose.
- Tenancy by the Entirety is another form of ownership reserved for married couples. Not all states recognize it. Each spouse owns half of the property and can only sell or transfer ownership with the other's consent. The surviving spouse receives the decedent's share of the property upon death.