A joint tenancy in common has certain unique characteristics. Tenants in common own property equally or unequally. Each owner can sell or raise finance against his share independently of the other co-owners, and when he dies, pass his share to his heir by will or intestacy. You don't need a special deed to transfer real estate to co-owners, but you will need to specify how those owners are taking title.
Check your mortgage documents. The vast majority contain a due-on-sale clause, which gives the lender the right to demand full repayment of the loan if the borrower transfers title. The phrase "due on sale" is misleading because the clause accelerates the loan even if the property isn't technically sold, but transferred for zero consideration. If your mortgage contains such a clause, you'll have to pay off the loan or obtain your lender's written consent before adding your son to the deed.
Acquire a blank template quitclaim deed relevant to the laws of your state online, an office supply store or attorney's office. A quitclaim is a simple transfer deed, frequently used to transfer title between family members. It "quits" your claim to the property as sole legal owner and re-transfers it to yourself and your son as co-owners.
Prepare the deed by filling in the blanks. Write or type your full legal name and mailing address as grantor, and your name together with your son's name and mailing addresses as grantee. Enter the city and county where the property is located, with the exact legal description of the property as exhibited on your deed. Some jurisdictions require you to fill in the amount of transfer tax due on the quitclaim transfer. This tax is assessed according to the amount due on the transfer. If your son pays no or a low sum of money for the transfer, you may be exempt from transfer tax.
Add language to designate each co-owner's share in the property. When property is transferred to more than one owner, the law presumes that those owners are tenants in common in equal shares. If this is not your intention, specify the allocated shares in the deed. For example, you might own 60 percent and your son 40 percent.
Take the deed to your county recorder's office. Some jurisdictions require you to sign the deed before a Notary Public so that she might witness your signature; others simply require a notary's stamp. Typically, only the grantor signs the quitclaim deed.
Record the quitclaim deed at the county clerk's office and pay the recording fee.
As laws vary across states, consult a local attorney before attempting to transfer any property interest.
Adding a person to your deed without receiving payment in return is essentially a gift. If the value of the gift exceeds your annual or lifetime exemption, you're liable to pay gift tax.
Transferring a part interest in your property to your son may have wider-reaching implications. For example, you may no longer be entitled to property tax exemptions, such as the senior exemption or homestead.
- Nolo: How Do You Take Ownership of Property as Tenants in Common or as Joint Tenants?
- Roberts and Roberts LLP: How to Add Someone to a Deed
- Naples Realty Attorney: By Their Deeds We Shall Know Them: Different Deeds and Different Titles
- HG.org. "Contracts 101—Warranty vs Quitclaim Deeds." Accessed Aug. 12, 2020.
- Realtor.com. "When Do You Need to Get a Quitclaim Deed?' Accessed Aug. 12, 2020.
- DivorceNet. "Interspousal Transfers Versus Quit Claim Deeds." Accessed Aug. 12, 2020.
- California State Board of Equalization. "Property Ownership and Deed Recording," Page 7. Accessed Aug. 13, 2020.
- As laws vary across states, consult a local attorney before attempting to transfer any property interest.
- Adding a person to your deed without receiving payment in return is essentially a gift. If the value of the gift exceeds your annual or lifetime exemption, you're liable to pay gift tax.
Jayne Thompson earned an LLB in Law and Business Administration from the University of Birmingham and an LLM in International Law from the University of East London. She practiced in various “big law” firms before launching a career as a commercial writer. Her work has appeared on numerous financial blogs including Wealth Soup and Synchrony. Find her at www.whiterosecopywriting.com.