Adding Someone to Title to Land

We occasionally receive calls from people wanting to add someone to title to their property as a form of estate planning. They’ve usually heard about this from friends or found it on the Internet as a way to avoid probate or having to make a Will.

Most of the time, once we discuss the facts of adding someone to title with them, they choose to do something else. Why? Because while this can be useful in certain situations, there are some very definite risks.

First, what does it mean to add someone to title? To put it simply, you are making them an owner of real estate by recording a deed.

If done correctly, recording this deed creates a joint tenancy with right of survivorship, so that when the first co-owner dies, the second automatically becomes the sole owner. In this situation, the first person’s interest in the property is a non-probate asset. It is not part of their estate and does not pass through probate.

This means that most creditors of the first owner to die cannot access the property to pay their debts after their death.

However, there are some significant risks, because co-owners are both owners of the property during their lives. There are three main issues that can come up during the co-owner’s lives.

First, this means that both co-owners’ interests in the property are available to their creditors while they are alive. Suddenly, the way of protecting property from claims against the original owner’s estate after their death actually opens up the property to claims against the new co-owner while they are alive.

Example 1: Janet, a parent, adds her son Greg to title to her house by deeding half of it to him. Then Greg has some financial difficulty and cannot pay his credit card bills. The lender is allowed to collect on Greg’s debt from his half of the house. Now, instead of protecting the house from Janet’s debts, she has actually put the house in danger of being used to pay Greg’s debts. Janet and Greg could both be out of the house.

The second big risk is a possible prodigal son issue. In that story, a rich man’s son demands his inheritance now, instead of later. Similarly, it is possible for one co-owner to force the sale of the property through a special lawsuit called a “partition.” In a partition, one co-owner asks the Court to order that the property be sold at auction and the money split between the former co-owners.

Example 2: After a couple of years, Greg decides he does not want to own half of his mother’s house, but instead needs money immediately. If Greg and Janet cannot agree on how to get Greg the money, or if Janet cannot afford to buy Greg out, he can file a partition lawsuit to get the house sold at auction, and then take his half of the proceeds. Janet then loses her interest in the house.

Finally, a deed is permanent. Adding someone to title requires the first owner to give or sell a property ownership interest to another person. Once that joint tenancy is created, the second co-owner is legally just as much of an owner as the first. The original owner cannot change their mind; they cannot take it back. The only way to get sole ownership again is for the new co-owner to convey their interest back.

Example 3: After creating a joint tenancy with her son Greg, Janet later discovers that Greg has serious credit card debt. Janet does not want Greg to be a co-owner anymore. But Janet cannot simply change her mind; she cannot force Greg to convey his interest back; it is his. All Janet can do is ask Greg to give or sell his interest in the property back to her. At that point, Greg may be unwilling to give up such a significant asset (and it may even be illegal for him to transfer his interest to Janet.)

So, while adding someone to title can be seen as an easy and inexpensive way to avoid probate, it can create a new set of problems during the co-owners’ lives. Even if the potential joint tenants are on good terms now, a lot can happen in the time between the creation of the joint tenancy and the death of one of them.

The good news is that there is a way to avoid probate, protect the property from the second owner’s creditors, and maintain full control over the property during the original owner’s life by putting the property into a revocable living trust. How and why to do this has been discussed in our previous article: “Do I need a Revocable Living Trust?”