Transferring ownership of a mortgage title is a complicated legal process that involves numerous steps. In most cases, homeowners should consider getting legal assistance to make sure that this process is done properly. The home title and the home deed are two different items, the deed specifies who legally owns the home while the title to the home reflects who the owner is as well as who has legal rights to the property based on amounts owed (if any).
Investopedia defines title as “The right to the ownership and possession of any item that may be legally recognized as belonging to someone or something...”. They further define deed as “A legal document that grants the bearer a right or privilege, provided that he or she meets a number of conditions...”
In order to transfer mortgage title ownership, a deed is required in all cases. Deeds may be prepared by an individual provided they understand which type of deed they need. There are three common types: (a) quit claim deed, (b) grantor deed and (c) warranty deed. In most cases, a quit claim deed is used to transfer the ownership of property from one person to another. There are other types of deeds, but these are the most referenced ones.
Reasons for transfers
A homeowner who has a mortgage on their home will have the right to have the lien that is placed by the mortgage company removed from their home via a deed. This provides the homeowner a title free from a mortgage lien. The mortgage company typically completes this transfer once they have received the final mortgage payment from the homeowner. The homeowner may then be required to pay a fee to the mortgage company to pay for the filing fees needed for filing the deed to transfer mortgage title ownership.
Those who have inherited property due to the death of a parent or spouse may also need to have a deed drawn up to claim ownership of a property left to them via a will. In some cases, the property has more than one name on the title and the name of the decedent must be removed from the title. In this instance, a deed would be filed to change the ownership from two owners to the sole owner or in the case of parent to children transfers, from the parent to the child. Generally, the administrator of an estate does this. In some cases, a homeowner may have filed a beneficiary deed prior to their death which can make the process less complicated.
Complications hampering transfer
If a homeowner has a mortgage on a property, before they can transfer ownership, they must obtain the approval of their mortgage lender. Most lenders have a “pay on sale” clause or a clause that prohibits the mortgagor from transferring the ownership of the property while monies are outstanding. In some cases, this can still be done by filing a quit claim deed that goes into effect once the mortgage is paid in full.
Understanding the process
A quit claim deed must be drawn up with the current name of the property owner, the information regarding the property and the information on the person who is going to be the new owner. The information for the property often includes book and page number (found at the courthouse or other legal authorities office) and a legal description of the property including the mailing address. The legal signatures of the person transferring the property and the person accepting the property may also be required.
The deed then must be filed at the proper legal offices for the county where the property is located. In some cases, this may be the county courthouse while in other cases it may be filed with a registrar of deeds office. There is generally a filing fee that is required to complete this type of a transfer.
The reasons for transferring a title on a property are varied including divorce, paying off mortgage or a gift to a child from a parent (before or after death). Each municipality may have different rules when it comes to filing the needed documents including when and where they are to be filed, if they need a notary seal to validate them and whether fees are involved.
Those who are considering a transfer of mortgage title ownership need to be aware of all the legal ramifications of this type of transfer including assuming of property taxes on the property. Other considerations that must be taken into consideration include whether a mortgage exists on the property. While it is possible to facilitate this type of a transfer without the guidance of a lawyer, it is strongly recommended that a qualified real estate attorney be contacted for guidance.