Understanding the Consequences
When you add someone to your deed, you are giving them control, enjoyment, possession, exclusion, and disposition rights over your property. Before adding anyone to your deed, consult an estate attorney and your mortgage lender to ensure you understand your rights and whether this is the best move for you.
Loss of Ownership Control
When you add someone to the deed, you transfer all or a portion of your ownership to them. Once done, you can’t reverse it unless that person provides consent. They can take out a loan on the property, demolish it, or sell their share, with little to nothing you can do to stop it. Ensure you understand the consequences and implications before signing.
Mortgage Lender Rules
Most lenders have a loan “due-on-sale clause,” allowing them to call the loan if the deed is transferred or the home is sold. When you add someone to your deed, you transfer part ownership, which may activate this clause. Obtain permission from your mortgage lender first, and understand the rules governing your situation.
Potential Liens and Claims
Adding someone to your deed can create liens and claims on your property. If the person added fails to pay taxes, incurs a tax lien, has creditors’ issues, or faces a divorce, the IRS, creditors, or their ex-spouse could lay claim to your home. Ensure you understand all implications and consult with a tax attorney or CPA before adding someone to your deed.
Other Hidden Risks
Adding someone to your deed implies becoming a joint owner rather than an exclusive owner. This change can impact your eligibility to sell or refinance your property. For older homeowners near retirement age, transferring assets can negatively affect Medicaid eligibility. Remember, adding someone to your deed does not make them responsible for the debt, and the original borrower remains solely responsible for repayment.
