If you are thinking of adding someone to your deed, you may find some unforeseen consequences!
- Once you’ve added someone, you cannot undo the deed unless the person you added consents.
- Once on the deed, a person can take out a loan on the property.
- Depending on local law, they may be able to sell their portion.
- Could they tear down the property?
- Make sure you mortgage allows and additional owner. Some lenders may require an immediate pay-off (or at least a full credit check)
- What if the person you added, predeceases you? You may end up with a co-owner you don’t want.
- You may open the property to the added owners tax, credit and family problems.
- The added person may effect your ability to sell or refinance (also check reverse mortgage)
Understand that adding someone to your deed changes you from a “sole owner” to a “joint owner” and should never be done without legal advise and direction.
NOTE: When gifting a share of real estate by way of adding a name to the deed, you may be subjecting the added person to capital gains taxes. Property that is transferred by deed (as opposed to will or trust) will give the added owner your “cost basis” and not afford a “step up” in cost basis if obtained by will or trust.
Please ask us about better ways to transfer property, be it by will, trust, or TOD designations.