How Can Homeowners Hold Title On Home Purchase
This Article Is About How Can Homeowners Hold Title On Home Purchase
One of the most common questions we get from our borrowers is how can homeowners hold title on a home purchase. Homeowners do not have to be on the mortgage note to be on title to the property. There are countless incidents where a married couple has one spouse go on the mortgage note but both spouses are on title to the property. There are many instances where one spouse cannot be on the note because of not meeting mandatory wait period requirements after a housing event and/or bankruptcy. In this article, we will discuss and cover How Can Homeowners Hold Title On Home Purchase.
Common Questions On How Can Homeowners Hold Title
In cases like these, the qualifying spouse will go on the mortgage note and both spouses will go on title. Homeowners often want to know how can homeowners hold the title. They want to know how can homeowners hold title and the best way where it protects them. Common questions are on how can owners of homes hold title to give them the best tax benefits. Other common questions include how can homeowners hold title to protect them if one of them dies and protect their homes from estate taxes. Other concerns on how can homeowners hold title are if both spouses are on title pass, how the property can be passed on to their heirs.
We will be discussing further how can homeowners hold title on their home purchase. We are not attorneys or certified public accountants so we can not give legal advice nor financial advice. We will cover general ways on how can homeowners hold titles on their home purchases. Homebuyers should seek the counsel of their tax and legal advisers to see what way in holding the title will be for them.
How Will Lenders Allow Home Buyers Can Hold Title To Property
Every mortgage borrower has their own unique situation. One way on How Can Homeowners Hold Title may benefit one borrower but not another. Not all married couples, whether opposite-sex or same-sex married couples do not share their assets 50/50. There can be potential tax implications, legal, and. or estate planning impacts on ways on how homeowners hold title to the property. It may be wise to consult with a tax and/or legal adviser. Just because borrowers’ legal advisers may suggest on a specific way on holding title, lenders may not accept it. For example, residential mortgage lenders will not allow homeowners to hold title on Limited Liability Company (LLC).
Buying Home Under A Limited Liability Company LLC
Residential lenders will not allow home buyers to purchase a home and hold it under a Corporation, Limited Liability Company, Partnership, and/or Trust like commercial lenders. It is very common for homebuyers to purchase a home under sole ownership and after closing they do a quitclaim deed to another entity such as an LLC, Partnership, Trust, or Corporation. If home buyers decide to do a quitclaim deed and do a transfer of deed after closing, they are in violation of the terms of the mortgage note and will trigger the Due On Sale Clause of their mortgage. Lenders can enforce this by mandating borrowers to pay off the mortgage note in full. Although most lenders will not enforce this as long as the homeowner is timely on their payments, there is always a risk of lenders enforcing the Due On Sale Clause. Most married folks want both partners on the title even though only one is on the mortgage.
Title Held Under Living Trusts
Title Held Under Living Trust
- Living Trusts is an estate tool used while individuals are still living and have not passed
- The purpose of living trusts is it gives the authority and power for the individual to control the distribution of their estate
How Title Held Under Living Trust is property owners transfer the ownership of the property to their Living Trusts. This is not allowed on residential finance but is allowed on commercial lending.
Types Of Ways Homeowners Can Hold Title
Lenders will allow mortgage borrowers to hold in different types of homeownership:
Title Held Under Sole Ownership
- The title under sole ownership is normally held to single individuals who have not been legally married
- Or unmarried home buyers who were married at one time but in now divorced legally
A married home buyer who wants to purchase the property and hold ownership to the home just under their name and not with their spouse:
- If the title will be held as sole ownership by a married individual, the spouse of the buyer will need to sign off on ownership and interest on the property at closing
- The spouse may need to be at closing or go to closing and sign the proper docs before the title agent
- This is called a hold harmless letter
Hold harmless agreements are common when a buyer is in the middle of a divorce or is separated where the other partner needs to sign this form.
Title Under Tenancy In Common
Title Held In Tenancy In Common:
Title Held Under Tenancy in Common is the individuals can sell the home and/or lease it out without any restrictions. With Tenancy In Common With Rights Of Survivorship, when one of the owners dies, the deceased ownership interests pass to the other owner(s). In states where there are no rights of survivorship when an owner dies, then that deceased owner’s interests go through probate and pass to the heirs.
Title Held Under Joint Tenancy
Title Held In Joint Tenancy:
- Most titles to homeowners are held under Joint Tenancy
- Under joint tenancy, ownership of a property is held by multiple owners
- In the event one of the owners passes, then ownership is transferred to the other owner on title
Titles On Community Property States
There are nine community property states in the United States. the nine community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. the nine community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Here are the nine community property states in the U.S.
In a community property state, whatever you bring into the marriage or receive individually through gifts or inheritances remains yours, but whatever you earn or acquire during the marriage is co-owned by both parties, regardless of who earned it or whose name is on the title. Of course, if you commingle gift or inheritance cash with a joint account, it very likely will be considered community property by a court.
As per the excerpt states above, any material goods of value acquired while a couple is married is owned 50%/50% on community property states. This includes real estate even though one partner is on the title. The other spouse owns the property whether or not the deed in their names or not on community property states. Both married partners need to come to closing to sign mortgage/closing docs on community property states.