The issue of transferring title to property to someone else, or to include another person in title (except in the case of a sale or other legally mandated reason), is a matter for serious consideration. I am often consulted about the possibilities of doing this, or by individuals who have done this, only to find themselves in trouble after doing it. Unfortunately, a lot of people think that because the paperwork is relatively simple, they can prepare it and charge a fee in the process. I think that paper holds everything you want to write on it, but it’s the substantive matter before the writing that must be well thought out before drafting the paper.

Below are some of these considerations:

1. Determine the tax consequences to both parties, the one already on title and the one about to be added to title. There may be all kinds of tax considerations: transfer taxes, real property tax exemptions, income taxes, capital gains taxes, just to name the most salient.

2. If you have a mortgage on the property, your mortgage probably has a due on transfer provision (generally paragraph 18 of the mortgage), which provides that the lender can require payment in full if the borrower transfers full or partial title to the property without lender’s consent. Generally, lenders will consent to a partial transfer of interest in the property, so long as the person responsible for the obligation remains on title.

3. Any liens on the property remain liens, even if the person who created them deeds out of title. This may be the case even when the lien is created after title passes, as title companies take the position that the transferor may have transferred the interest in anticipation of the lien.

4. If the transferor transfers title and later declares bankruptcy, the transfer may be voided by the bankruptcy court.

5. An important consideration is public benefits, such as public assistance, Supplemental Security Income and Medicaid.

6. It may be difficult for someone owning a property interest to obtain student grants and loans.

7. Consider any possible Internal Revenue Code Section 1445 implications.

8. Consider spousal rights.

9. Consider estate law (inheritance) consequences.

10. Consider estate planning issues.

11. Some transfers of title may also void the terms of the title insurance an owner purchased when s/he bought the property.

12. If you decide to proceed, make sure that you change the homeowner’s insurance to cover the change.

As you can see, there are many possible ramifications from a title transfer. Some of the above may not be of any importance to a particular change, but some may be of extreme importance to others. It is imperative that you go through a checklist of items to consider, know the consequences of your decisions and act accordingly. Once a deed is recorded, it may not be so easy to change back to the way things were before the deed transfer.