08/05/2017
Advantages & Disadvantages of Adding Someone to a title Deed (BEWARE)
Putting someone on your title deed has its advantages and disadvantage. Make sure you have very sound reasons for doing this because it cannot be reversed without the consent of the new owner you have given title to. If one of the reasons you want to add a family member or a friend to your deed is to avoid probate, talk to your attorney or tax accountant before you make this move.
What Rights Are Conveyed by Deed?
Ownership of real property is called “title.” The deed represents that title, and carries with it certain rights, among these, are the rights of possession, control, exclusion, enjoyment, and disposition (the “bundle of rights”). When you convey partial title to someone else, you are giving them the same “bundle of rights” that you are entitled to. To add someone to your deed, you will typically use a quitclaim deed or a special warranty deed, depending on your jurisdiction. These deeds make no warranties with respect to title, they merely convey whatever interests you have in the property to the grantee.
Advantage: Easy Transfer With no Probate
Partial ownership between a husband and wife provides a level of protection for the surviving spouse should something happen. Likewise, an elderly person who wants to avoid the expense of probating their home may consider adding a family member or friend to their deed. There are certain types of vesting of ownership you can convey, including joint tenancy with right of survivorship or tenants in common. Before deciding on how you want the title to vest in the new owner, consult your attorney or accountant. There may be tax ramifications connected to certain conveyances, including an increase in your property tax.
Disadvantage: Loss of Control
Partial ownership of your home, once conveyed, cannot be revoked without that person’s consent. You lose some control of your property. If you want to refinance or sell it, you must obtain the permission of the new owner on title. If he does not agree, your only recourse will be to seek redress in the court.
Disadvantage: Lender Permission Required
If you have a mortgage, your lender could refuse to allow you to add someone else to your deed. Most mortgages have a “due on sale clause” as one of the terms of the mortgage contract. In essence, the “due on sale clause” requires the mortgage to be paid in full should you attempt to sell or convey any interest in the property. Your lender may waive this provision if the conveyance is to a family member.
Disadvantage: Property Exposed to the Liability and Debt of Others
This may be the biggest disadvantage of all. A portion of your home could become accessible to attachment by creditors without your consent or knowledge. A portion of your home could also be devised to someone else, which would mean you could end up sharing an interest in your home with a complete stranger. These disadvantages may be addressed either in the deed by imposing restrictions on further conveyances, or by a separate agreement. To avoid any unforeseen problems, you should discuss with your attorney exactly what you hope to accomplish by adding someone else to your deed.
This may be the biggest disadvantage of all. A portion of your home could become asses sable to attachment by creditors without your consent or knowledge. A portion of your home could also be devised to someone else, which would mean you could end up sharing an interest in your home with a complete stranger. These disadvantages may be addressed either in the deed by imposing restrictions on further conveyances, or by a separate agreement. To avoid any unforeseen problems, you should discuss with your attorney exactly what you hope to accomplish by adding someone else to your deed.
