How to Add an Owner to a Mortgage Deed at Closing

Your name can be on your home’s title even if you aren’t on the mortgage. This can give you an element of protection if your name isn’t on the mortgage. You can ask permission to add an owner to a mortgage deed, but this typically needs to be set up well in advance of closing. Otherwise, you’ll need to add the person later using a type of warranty deed called a quitclaim deed.

Adding Name to Closing Deed

Closing day on a house is an important time. Your lender has approved the loan, so all that’s left is signing on the dotted line. After the closing, your deed will be recorded with the local municipality, making it part of the official record.

The best time to mention the names you want on the deed is well before closing. By the time you arrive at the closing table, your agent and mortgage company will expect everything to remain as-is. However, you can add an owner to the deed after closing, as long as you understand the risks associated with it.

Closing Procedures for Deeds

Well before closing day, your attorney is hard at work preparing the deed for you to sign at closing. You will get a copy of this to review and approve, so it’s important to voice any issues you have as soon as possible. Your closing deed should include correctly spelled names of all parties who want to be named as owner on the new house.

If you miss something when you’re checking the deed, such as a misspelled name, you should mention it as soon as you notice the error, even if it’s at closing. However, if you don’t notice it until afterward, you can still amend the deed after it’s filed. This is called a correction or corrective deed, deed of correction or deed of confirmation, depending on the terminology used in the state where the home is located.

Tenancy in Common Vs. Joint

If you can make a change to the deed at closing, you’ll need to make some decisions about how to word things. There are two types of joint ownership of a home, each with its own benefits:

  • Tenancy in Common – A tenancy in common allows property to be divided in various ways. The best thing about this setup is that additional owners can be added at any time.
  • Joint Tenancy – This setup has both parties owning the property equally. With a joint tenancy, the property automatically transfers to the surviving owner if one party dies. This right of survivorship makes joint tenancy the preferred option.

Adding Names With Corrective Deed

After closing day on a house, adding a name can be done, but how complicated it is depends on the state. In some states, you can merely submit a corrective deed asking that the name be added. But this could cause confusion.

A corrective deed is used primarily to correct small errors like typos. When you closed on the house, the deed stated that the previous owner transferred it to you, the sole name on the deed. By adding a name, you’re changing the parties receiving that transfer, which typically will mean additional paperwork.

The Due-on-Sale Clause

Before closing, check with your real estate agent or lender on whether your mortgage has a due-on-sale clause. If it does, changing ownership later could activate this clause, which will require you to pay the balance of the loan in full to avoid foreclosure. Due-on-sale clauses are very common, so chances are your mortgage has one.

The due-on-sale clause is not intended to make it difficult for you to add your spouse to the property deed after you move in. Instead, it’s a protective measure to keep you from transferring the property to someone else entirely without your lender’s permission. Still, if your contract has a due-on-sale clause, it might be worth it to insist on having your spouse added to the deed during the closing process.

Adding Name Using Quitclaim Deed

The common way to change the names on a property is through a type of warranty deed called a quitclaim deed. What the quitclaim deed does is replace, or “quit,” the original deed with a new one bearing the names you want on it. You’ll need to list your name and specify that you and the other party will hold the property in joint ownership status.

You can file this type of warranty deed at your county recorder’s office, sometimes without the assistance of an attorney. However, in some states, you’ll be required to have an attorney draft a letter on your behalf in order to make the addition. Either way, it may benefit you to check with a legal expert as to whether making the change is advisable in your situation.

Lender Permission to Add Person

Whether you add a person on the closing day on a house or later, you’re still expected to loop your lender in on the change. You’re transferring part of your ownership in the house to someone else. Even if it’s a spouse or life partner, your lender has an interest in this person who shares ownership of the home it financed.

Before adding someone to your deed, carefully read your contract, paying particular attention to the due-on-sale clause. Then pick up the phone and contact your lender to ask what you need to do. Make it clear that this person is not named on the mortgage and, if your lender has a problem with the change, it may be best to let it go.

Adding Beneficiaries to Deed

Often adding someone to the closing deed is done in order to make sure it passes to the other person in the event of your death. If the person is a child or similar beneficiary, though, the transfer will be seen as a gift for tax purposes. As of 2019, you can give up to $15,000 per person, or $30,000 per couple, without tax consequences. But there’s a lifetime exclusion of $11.18 million that should cover your entire estate.

Even if you add a child to your deed, though, you could find it poses a hindrance. If your child is under the age of 18, many states see minors as unable to sign contracts, which means things could get complicated. If your spouse wants to sell the house, for instance, there could be a delay while the state brings in an attorney to represent the interests of your minor child.

Knowing the Risk

Whether you add someone to the closing deed before you move in or after, it’s important to be aware of the liabilities that come from having someone on your deed who isn’t on the mortgage. The debt falls on you, but this other person is enjoying the benefits of ownership without the obligations of the monthly payment. It might be wiser to consider putting the other person on the mortgage, as well as the home deed, even if this delays closing or requires you to refinance.

It's also important to consider the liability that comes from having someone else on your deed. If the other person ends up owing money to creditors, whether through business or personal endeavors, those creditors could name your home among the assets they can claim.

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