Hi Ya'll;We have had the situation many times where partners/spouses/friends are buying a property together but only one is going on the loan. We get asked all the time how can we add that person to
Adding A Name To Title At Closing
We have had the situation many times where partners/spouses/friends are buying a property together but only one is going on the loan. We get asked all the time how can we add that person to the deed at closing.
It is common in closings that a transaction may close in one name but the purchaser wishes the title to be held some other way after closing. Here are a few situations that you need to be aware of;
Spouse/partner WILL BE ON TITLE BUT WILL NOT BE ON THE LOAN.
If there is a lender involved, the first step is to check that they will allow this to happen.
If they do, then typically the lender will have the non-borrowing party sign both the Security Deed and the Truth In Lending document. Therefore, the person being added to title will need to attend the closing ceremony and both names should be listed on the contract.
AFTER CLOSING, PURCHASER WISHES TO TRANSFER THE PROPERTY INTO THEIR LLC/TRUST ETC
If there is a typical loan involved this is a violation of the due on sale clause contained in the Security Deed. Many times, the parties are willing to take that risk and if so, they will need to have a deed prepared after closing, transferring the property to the name of the desired entity or party. If the lender discovers this the lender can call the entire loan due. The attorney that handled the closing will not typically be willing to prepare a deed under this circumstance.
If a deed is done in this situation, the person being added does not need to be present to sign the deed.
DANGERS IN ADDING A PERSON TO TITLE
1. If the title is changed after closing without the lender's permission, the lender could call the loan due under the Due on Sale Clause of the Security Deed.
2. If a name is being added to title it is advised to do a lien search on the name being added. Any lien against that person will attach to the property. The property will not be able to be sold without either paying or cancelling the lien.
3. The person added to title will have to sign any deed to further transfer or encumber the property.
4. Changing the name on the title could invalidate or reduce the coverage under the owner's title insurance policy.
The majority of the time the lender has approved of the spouse being on the title with no issues. The person being added to the title needs to be present at the loan to sign the title docs, but not the loan docs.
As always, we are here to help you get through the purchase and sale of your property and have excellent preferred closing attorneys we use!