Published: April 01, 1995

Before You Add Someone To Your Title (2001)

A fact sheet that lists several points to consider before adding someone to the title of your home, such as "You are giving ownership rights and control to another person," and "The method of transfer makes a big difference."

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Note: Last revision 1995. Use this information as a general guide only; consult with a local consumer group for laws specific to your state.

BEFORE YOU ADD SOMEONE TO YOUR TITLE...

There are many reasons why you might be asked, or want, to add another person to the title to your home. But before you do, consider the following.

Giving Ownership Rights and Control to Another Person

You are giving ownership rights and control to another person. If you sign a deed giving all or part of your property to another person, that person will have enforceable ownership rights in the property which you will not be able to control. If you transfer all of your ownership to another person, he or she can take out a loan on the property, remodel it, tear it down or even sell it, and you cannot object. Even if you transfer only a portion of your interest in the property to another person, he or she will have full control of his or her portion and may be able to force a sale of the property.

Don't Add Another Person to your Title beacause you Want him/her to Have the Property upon your Death

You don't need to add another person to your title now just because you want him or her to have the property upon your death. If you intend for another person to have your property upon your death but you intend to keep it during your lifetime, you do not need to add the other person to your title now. You can have a will made to carry out your intention to transfer the property upon your death. Be careful if someone tells you to add him or her to your title now to avoid "estate taxes" if the property is transferred by will. In California, estates with a value of less than $600,000 are not subject to estate taxes. Even if your estate is worth more than $600,000, you do not have to add the other person to your title. You might be able to create a trust to transfer the property upon your death and avoid estate taxes. See an attorney or estate planner for a full explanation of your rights.

The Method of Transfer makes a Big Difference

The method of transfer makes a big difference. There are different ways to transfer property to another person and each has different legal consequences. A Grant Deed immediately transfers all of your interest, ownership and right in the property. After signing a Grant Deed you have no further control over the property and if you are living on it, you become a mere tenant and can be removed by the new owner at any time. Additionally, a Grant Deed contains a promise that your title and ownership of the property is free and clear, subject to the existing claims and liens you disclose. If it later turns out that someone else has a claim of right against the property which you did not disclose and unless you have title insurance, you could be liable for monetary damages and could be sued. A Quitclaim Deed is similar to a Grant Deed in that it immediately transfers all of your interest, ownership and right in the property. But a Quitclaim Deed does not include a promise that your ownership is good or free from other claims. A Trust Deed is generally used when your property is security for the performance of some obligation, usually the repayment of a loan. If you do not perform the obligation (repay the loan), your home can be placed in foreclosure and sold at a public auction.

Don't Agree to Let Someone "Hold" Title to your Property

Don't agree to let someone "hold" title to your property. At some point you may want to take out a loan on your property to make repairs or pay bills or to refinance your mortgage at a better interest. Some dishonest broker or lender may ask you to sign a Grant Deed he or she can "hold" while they look for financing. DON'T DO IT! Once you sign the Deed, there is NOTHING to stop the crook from selling your property or taking out a loan for him/ herself without your knowledge. The crook may also refuse to transfer the property back to you or if they do, there may already be new liens against the property. Honest loan brokers and lending companies do not operate this way. If you need to take out a loan, be sure you deal with a reputable lender and always insist upon an escrow.

Never Add Another Person to your Title to Help him/her get Credit or a Loan

Never add another person to your title just to help him or her get credit or a loan. It may be tempting because the person may be a close friend or relative and has a sympathetic story about problems he or she is having establishing credit or qualifying for a loan, but NEVER add another person to your title just to help him or her get credit or a loan. If you do, you not only risk losing your property, but you are committing the crime of bank fraud. If the person tells you that the bank or lender told him or her that this is the only way for them to qualify for credit or a loan, DON'T BELIEVE IT! Honest banks and lenders do not operate this way. Also, if the person you add to your title fails to repay the loan or credit, you will be held fully responsible and your credit will be ruined or you could lose your property.

Your Property Taxes will be Increased

If you add another person to your title, your property taxes will be increased. Under existing law, the tax assessor has the right to re-compute the value of your property and increase your property taxes whenever there is a change in the ownership of your property. You could end up paying hundreds of dollars more in property taxes each year.

REMEMBER!

DO NOT SIGN A DEED TO YOUR HOUSE UNLESS YOU'RE WILLING TO GIVE UP YOUR PROPERTY FOREVER.

IF SOMEONE WANTS YOU TO SIGN ANY PAPER AND YOU ARE NOT ABSOLUTELY SURE WHAT IT IS, DON'T SIGN UNTIL IT HAS BEEN REVIEWED BY AN ATTORNEY.

© Copyright 1995 Legal Aid Foundation of Los Angeles

Produced by Consumer Action

Electronic publication funded by BACEF

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Keywords

Buying Home, Adding Someone To House Title, House Title, Property Title, Housing

Sponsors

Bank of America Consumer Education Fund (BACEF)

Notes

Filed Under

Fraud/scams   ♦   Housing   ♦   Buying A Home   ♦  

Copyright

© 1995 Consumer Action. Rights Reserved.