Legal ownership of real property normally is conveyed through a deed. Over time, a piece of real property such as a house also will accumulate a chain of title or a history of its owners over the years. The law makes it relatively easy to add another owner to a piece of real property simply by adding that person's name to a newly drawn-up and properly recorded deed. Unfortunately, adding a new owner to a mortgaged home's title could negatively affect its mortgage loan.
Property Ownership and Mortgages
With a few exceptions, such as when dealing with minors, the law allows property owners to add additional owners as they see fit. However, consider what effects adding a new owner to a home's title might have on its mortgage loan. Most mortgages today contain what's called a due-on-sale clause. Adding a new owner to a mortgaged home's deed might cause its mortgage lender to declare the loan in default and demand full payment.
Obtaining Mortgage Lender Permission
It's generally not advisable to add somebody to your property's deed and title. If you do decide to add a new owner to a mortgaged property such as a house, check its loan documents for a due-on-sale clause. If a due-on-sale clause in a mortgage exists, obtain consent from the mortgage's lender in writing before adding any new owners.
Adding a New Property Owner
To add another owner to your property's title, you usually just need to write up a new deed and then have it signed. In states like California, however, you generally must record your deed in the applicable county in order for it to be valid. Unless you have experience in drawing up and recording property deeds, consider using a real estate attorney to do so. Your options also are limited if your mortgage lender refuses permission to add a new owner to your home's title.
Mortgage Lenders and Property Titles
If your mortgage lender won't give permission to add others to your property's title, don't be tempted to do it anyway and take your chances. Lenders occasionally check their properties' titles for evidence of new owners or even fraud. If you really want to add somebody else to your mortgaged property's title and the lender has refused, you could both try to qualify for a new mortgage.
Tony Guerra served more than 20 years in the U.S. Navy. He also spent seven years as an airline operations manager. Guerra is a former realtor, real-estate salesperson, associate broker and real-estate education instructor. He holds a master's degree in management and a bachelor's degree in interdisciplinary studies.