How Does Changing the Deed Affect the Mortgage?

by Beverly Bird, Demand Media

    It's a huge commitment to add someone's name to your home's deed, but it requires even more faith not to refinance the mortgage at the same time. Changing one doesn't have any effect on the other. The deed addresses ownership, and the mortgage addresses liability. Ideally, both your names should appear on each document.

    Ownership

    Changing a deed requires creating a new one. You can't just pencil in an additional name, or cross one off. If you want to add someone's name to the deed, or take it off because you're parting ways, you'd typically do it with a quitclaim deed. Quitclaim deeds don't actually make any promises that you own the interest you're transferring, but because the transaction doesn't involve a third party, a quitclaim deed is appropriate. The deed would either transfer ownership from one of you to both of you, or from the two of you to only one. In the first case, you now both own the house. In the second case, one of you has relinquished your ownership interest in the property.

    Mortgage Liability

    Your mortgage is a contract between you and the lender. It's your legal promise to repay the money the lender advanced so you could buy your home. Changing the deed to the property doesn't supersede that. If you create a deed transferring ownership from one of you to both of you, one of you now owns half the property without any financial liability. The flip side is that if you deed the house from both names into one name, and if you're both on the mortgage, one of you no longer owns the home, but you're both still legally responsible for making mortgage payments on it.

    Commingling

    If you've added your partner's name to your deed because you've gotten married, another problem could present itself. If you purchased the home before you got married, it would normally be your separate asset if you ever divorce. You "commingle" your separate asset if you put your partner's name on the deed. Your separate property isn't separate anymore. Now it's marital property, subject to division in a divorce. A divorce court could address the problem of the outstanding mortgage, assigning some liability to your spouse. But even this doesn't bind the mortgage company or contractually obligate your spouse to pay it post-divorce. You'd have to take her back to divorce court to force her to pay.

    Options

    There are ways to make sure that the names on your deed match the names on your mortgage, but the solutions may not be easy. You can approach your lender and ask if your partner can assume responsibility for the mortgage with you. Your lender may or may not agree. Your only other option is to refinance the mortgage into both names, or refinance into one name if you're breaking up. If you've already given away your ownership in the property, but you're still on the mortgage, you're at the mercy of the other person. You'd have to create another deed to transfer ownership back again.

    About the Author

    Beverly Bird has been writing professionally since 1983. She is the author of several novels including the bestselling "Comes the Rain" and "With Every Breath." Bird also has extensive experience as a paralegal, primarily in the areas of divorce and family law, bankruptcy and estate law. She covers many legal topics in her articles.