Before You Add Someone To Your Title (2006)

There are just a few valid reasons to amend your homeownership by adding another person’s name to the title to your home. This is also called transferring title. If you transfer all or part of your ownership to another person, you lose control.

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Table of Contents

• Before You Add Someone To Your Title
• Transferring title
• Don’t lose control of your property
• Don’t let someone "hold” title
• Never add people to your title to help them get credit or loans
• Your property taxes may increase

Before You Add Someone To Your Title

There are just a few valid reasons to amend your homeownership by adding another person’s name to the title to your home. This is also called transferring title. If you transfer all or part of your ownership to another person, you lose control.

Legitimate reasons to amend your home’s title:

• You wish to add your spouse to the title.
• You are selling the property.
• You are borrowing against your home equity and you are required to amend your title to give the lender a security interest in your property.

You could lose your rights if you add someone to your title under the following circumstances:

• Allowing someone to “hold” the deed temporarily.
• Adding a person other than a spouse or child to the title can result in higher property taxes.
• A deedholder (even one who holds only a percentage of the property) can take out mortgages and loans, tear down your house or sell the property.
• A deed transfer may trigger a full payment on your mortgage.

Transferring title

There are different ways to transfer property to another person. Each has different legal consequences.

A Grant Deed immediately transfers all of your interest, ownership and right in the property. After signing a Grant Deed you have no further control over the property and if you are living on it, you become a tenant and can be kicked out by the new owner at any time. A Grant Deed contains a promise that your title and ownership of the property is free and clear, subject to the existing claims and liens that you disclose. If it later turns out that someone else has a claim of right against the property that you did not disclose, you could be liable for monetary damages and could be sued. To guarantee a clear title, you must do a title search and purchase title insurance.

A Quitclaim Deed is similar to a Grant Deed in that it immediately transfers all of your interest, ownership and right in the property. A quitclaim deed can be used to remove someone from or add someone to the title to your home or other property. But a Quitclaim Deed does not include a promise that your ownership is good or free from other claims. To guarantee a clear title, you must do a title search and purchase title insurance.

A Trust Deed is generally used when your property is security for the performance of an obligation that involves your home, like a mortgage or the repayment of a home equity loan. If you do not repay the loan, your home can be placed in foreclosure and sold at a public auction.

Don’t lose control of your property

When you add another person to your home’s title, you are giving ownership rights and control over your home to that person. If you sign a deed giving all or part of your property to another person, that person will have enforceable ownership rights in the property. You will not be able to control this.

If you transfer all or part of your ownership to another person, you lose control. That person can take out a loan on the property, remodel, tear it down or even sell the property—and you can do nothing about it. Even if you transfer only a portion of your interest in the property to someone, that person will have full control of his or her portion and may be able to force a sale of the property.

You might want a relative or friend to have your property upon your death. You don’t need to add someone to your title just because you want that person to have the property when you die. If you intend for another person to have your property upon your death but you intend to keep it during your lifetime, you do not need to add the other person to your title now. You can outline your intention to transfer the property upon your death in your will. Be careful if someone tells you there will be “estate taxes” if the property is transferred by will. Estates with a value of less than $1,000,000 are not subject to federal estate taxes. Even if your estate is worth more than $1,000,000, you do not have to add the other person to your title. You might be able to create a trust to transfer the property upon your death and avoid estate taxes. See an attorney or estate planner for a full explanation of your rights.

Don’t let someone “hold” title

Don’t agree to transfer title to your property temporarily. At some point you may want to take out a loan on your property to make repairs or pay bills or to refinance your mortgage at a better interest. Some dishonest broker or lender may ask you to sign a Grant Deed he or she can “hold” while they look for financing. Don’t do it! Once you sign the Deed, there is nothing to stop the crook from selling your property or taking out a loan for him/ herself without your knowledge. The crook may also refuse to transfer the property back to you or if they do, there may already be new liens against the property. Honest loan brokers and lending companies do not operate this way. If you need to take out a loan, be sure you deal with a reputable lender and always insist upon an escrow.

Never add people to your title to help them get credit or loans

Don’t add anyone to your title so that they can use your property as the collateral for a loan. If the person you add to your title fails to repay the loan or credit, you will be held fully responsible and your credit will be ruined and you could lose your property.

Your property taxes may increase

If you add any person who is not your spouse or your child to your title, your property taxes might increase. Under existing law, the tax assessor has the right to adjust the value of your property and increase your property taxes whenever there is a change in the ownership of your property. You could end up paying hundreds of dollars more in property taxes each year.

Do not sign a deed to your house unless you are willing to give up your property forever. If someone wants you to sign any paper and you are not absolutely sure what it is, don’t sign until an attorney has reviewed it.

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Published / Reviewed Date

Published: August 25, 2006

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