We received another question from a viewer: “We are getting ready to purchase a new home (my partner and I), but I’m the only one that is going to be obligated on the financing portion of the deal– can we add my partner to title?”
When we say “title,” we are referring to the person named as an owner on the deed. When a property is conveyed to you by the seller, they are granting their interest to you as the new owners.
When two or more people are purchasing a property, one or more of them may not be financially obligated to repay the loan. A person who is an owner but does not have an obligation to repay the loan is sometimes referred to as a “non-obligor” or “non-borrower.”
One easy solution would be to have the additional name(s) added to the deed after closing. Be careful because the mortgage that borrowers sign includes a covenant stating that the buyer won’t transfer the property without the lender’s permission. Adding a partner to title after closing may be deemed such a transfer resulting in default.
If you know you are going to transfer the property, then you want to notify your lender well in advance of closing.
The lender will likely agree to allow your partner to be a co-owner. Usually, the lender’s only requirement is that the non-obligor owner must sign the mortgage and a few ancillary documents at closing. If the borrower does not repay the loan, the lender will foreclose. The right to foreclose must also be granted by the non-obligor; otherwise, the non-obligor may have the right to claim that the lender cannot foreclose their interest.
In conclusion, you can be a title holder and not be obligated to the loan.
If you have any questions about a Non-Obligor Title holder contact us by calling (781) 319-1900.
Copyright © 2019 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.