What form is needed to add me to my sister's home that I have assumed the loan on?

Full Question:

I purchased a home from my sister on 10/1/04. I gave her $5000 down and took over payments. I have been making payments since then to the mortgage company, and the home remains in her name. What legal form do I need to fill out so that I don't lose the home if something were to happen to her. I am a single parent with a minor child and do not want to lose my home.
03/31/2009   |   Category: Real Property ยป Sales   |   State: New Mexico   |   #15828


There are various forms that may be used. The nature of the transaction may have tax implications. A new owner doesn't acquire ownership until a deed is transferred. Life is uncertain and contracts may be breached, so if your goal is certainty of ownership, a filed deed is the best assurance of ownership.

A deed is the written document which transfers title (ownership) or an interest in real property to another person. The deed must describe the real property, name the party transferring the property (grantor), the party receiving the property (grantee) and be signed and notarized by the grantor. In addition to the signature of the grantor(s), deeds must be acknowledged to be recorded and acceptable as evidence of ownership without other proof. A valid deed must be delivered and accepted to be an effective conveyance. Most states assume delivery if the grantee is in possession of the deed. The deed also must be accepted by the grantee. This acceptance does not need to be shown in any formal way, but rather may be by any act, conduct or words showing an intention to accept such as recording the deed. To complete the transfer (conveyance) the deed must be recorded in the office of the county recorder or recorder of deeds in the county in which the real estate is located. There are many situations in which it may be desirable to add or delete a person's name from a deed, such as adding or removing a spouse, child or sibling. A person can only be deleted from a deed with their approval, i.e., they must execute the deed (sign and have their signature notarized). If the essential elements that make a deed legally effective are missing, a deed may be voided.

There are two basic types of deeds: a warranty deed, which guarantees that the grantor owns title, and the quitclaim deed, which transfers only that interest in the real property which the grantor actually has. The only type of deed that creates "liability by reason of covenants of warranty" as to matters of record is a general warranty deed. A quit claim deed contains no warranties and the seller doesn't have liability to the buyer for other recorded claims on the property. The purchaser takes the property subject to existing taxes, assessments, liens, encumbrances, covenants, conditions, restrictions, rights of way and easements of record. The quitclaim is often used among family members or from one joint owner to the other when there is little question about existing ownership, or just to clear the title.

A deed indicating ownership is a separate issue from the liability of the person named in a mortgage. If the debtor named on a loan defaults in payment, the property used as security for the loan may be subject to foreclosure even if the owner is a different person than the debtor on the mortgage loan. It may be possible to have asume the mortgage or have it refinanced.

A contract for deed, or land contract, is often used as an alternative means of financing the purchase price of property. The buyer does not receive an actual deed until payments are made under the terms of the contract for deed agreement. Until the buyer receives a deed, ownership isn't transferred and the property is subject to being foreclosed on if the mortgagee/owner defaults on the mortgage. The responsibility for payment for the property is a separate issue from the ownership of the property.

If there is a mortgage on the property, the contract may violate a due-on-sale clause in the mortgage which the lender may or may not seek to enforce. Most lenders require that the mortgage or deed of trust contain a due on sale clause. This is an acceleration clause in a loan, calling for payment of the entire principal balance in full, triggered by the transfer or sale of a property. Such a clause permits a secured mortgage lender (federal, state or private) to call the entire unpaid loan balance due and payable immediately if the property securing the loan is sold, transferred, traded, gifted or otherwise disposed of without the lender’s prior written consent.

If the home is foreclosed on, the buyer may lose investment payments that are made and then the buyer loses the home.

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