Sometimes property owners may want to add or remove a name on the deed, and sometimes the deed must be changed to reflect the death of the property owner or inheritance to the heirs. You must understand that adding, removing, or otherwise changing the deed still technically involves transfer of property.
For example, “adding” a name on a deed is not simply adding a name to an existing deed, but instead it requires a new deed involving transfer of the property to oneself. So if a homeowner husband wants to add his wife to the deed, the property must be transferred from the husband as current owner, to the husband and wife as new owners.
A real property purchase is often financed, by way of obtaining loan from the bank and giving security interest (i.e. mortgage) in a property as collateral for the loan. A “due-on-sale” clause is a common provision in mortgage documents that requires the full payment of the loan balance upon transferring the property to anyone.
Could there be any problems in adding or removing a spouse on the deed? The short answer is no.
Although due-on-sale clause can be triggered even for transfer of the property to a trust or business owned by the property owner, there are exceptions. Some of the exceptions include transfer to a relative upon borrower’s death, transfer between children or spouse of the borrower, and transfer based on separation or divorce.
Adding a spouse to the deed as part of estate planning is legitimate. For example, if a property is owned by husband and wife as joint tenants with right of survivorship, then upon death of one spouse, the surviving spouse automatically becomes sole owner of the property without the probate process. However, certain transfers under certain circumstances may be deemed as an attempt at hiding assets from creditors, which could cause big problems. With so much at stake, it would be wise to explore all your options and their possible consequences.
If you are interested learning more about intrafamily property transfers or any other real estate transfer matters, contact our office at 718-539-1100 or email us at firstname.lastname@example.org.