Can I Be on the Title & Deed if I'm Not on the Financing?
The title policy for a property identifies the owner and the lender and lists any encumbrances. If an owner wishes to transfer title to another person, he would use a deed. Most states use warranty deeds for this purpose, but a few use a grant deed. A grant deed conveys title, but a warranty deed states the grantor guarantees the property is free and clear of any unknown encumbrances.
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Financing
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When a person buys or refinances a property and obtains a loan, the lender wants the borrower to be on the note and deed and will require a title policy to ensure the lender will be in first position. He also wants a guarantee there are no other liens or encumbrances on the property. In most cases, lenders will not allow a third party added to the title, unless he is also one of the borrowers.
Deed
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When financing is complete and title established, you can add an additional party to the title. A warranty deed will deed the property from the current titleholders to the current titleholders plus the additional party. A new title policy will then show all parties holding title.
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Title
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A title company is a neutral third party that researches records at the county recorder's office to ensure there are no liens or judgments against a property. This is to guarantee the lender's loan documents record as a first trust deed. Adding another party to the title after the loan records will have no effect on the lender's position.
Considerations
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If you add an additional party to the title, she will have a financial interest in the property, but she will not have any obligation to pay for previous liens. One reason to do this could be if a potential co-borrower could not qualify for a loan on the property, but already had an interest in it. You could record a deed taking him off the property to qualify for the loan, and then add him back on title after the loan records. Your title company will usually do this at a nominal cost.
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