How to Add a Person to a Home's Title but Not the Mortgage

by Steve Lander
Changing your property's title could accelerate your mortgage.

When you own a piece of real estate, one of the fundamental rights is the ability to transfer ownership of the property in whole or in part, by sale or gift. It's your house to share. Unfortunately, when you encumber the property with a mortgage, which is also a fundamental right, you may limit your ability to transfer the property. In other words, just because you have the right to add someone to your deed doesn't mean that your lender will let you.

Carefully review your promissory note and mortgage or deed of trust. These are the legal documents that govern your loan and let you know what your actual rights are. Most loans contain language called a "due-on-sale" or "acceleration" clause that says that if you change the ownership of the property without your lender's permission, the loan immediately becomes due.

Contact your lender and request permission to change the title of your property but not the mortgage. If they grant permission, ask them to confirm it in writing. Most due-on-sale clauses can be waived in writing. Many lenders won't give approval for this, though.

If your lender approves, create, sign and record a quit claim deed in which you give a partial interest in your property to the party whose name you want to add to your title. Since the act of recording the deed makes it a matter of public record, if you do this without your lender's permission you'll be taking the risk that the lender will discover the transfer and call the loan due.

File a gift tax return if you add anyone other than your spouse to your deed, and if the value of the interest in your house is worth more than the annual gift tax exclusion, which in 2013 is $14,000. To the IRS, adding someone to your deed is equivalent to giving them a gift of a portion of your real estate's value. Because calculating the value of the gift and its long-term impact can be complicated, you may choose to seek the help of an estate attorney.

About the Author

Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.

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