Dear Mr. Premack: I have a mortgage on a house in San Antonio where my mother lives. I’m her only daughter and am not currently living in that house. She makes the loan and tax payments. How can I add my mother, who is 69, to the deed so we can apply for the 65+ and homestead exemptions? – CR
Dear Mr. Premack: My husband and I are joint owners of our house, with a mortgage, in both of our names. He passed away last October with a simple Will leaving everything to me. We have not had the Will registered at the courthouse. I would like to have my daughter’s name added to the mortgage. How do I go about doing that? – CS
The common theme in both of your letters is that you want to adjust ownership of your homesteads. Both are subject to mortgages. A mortgage is officially called a “deed of trust” in Texas. It is a contract you signed in order to obtain funds to purchase the home. In it, you agreed to various restrictions meant to protect the lender and to impose liability on you for repayment of the promissory note which you also signed.
One of you wants to add your mother as co-owner of the home, the other wants to add your daughter as co-owner of the home. You see benefits to having mother-daughter partnerships, and ask how to accomplish your goals.
First CR: you want to add your mother to the deed, but that is a change in ownership that likely violates a provision of the mortgage which says something along the line of “I agree not to transfer or sell an interest in this home without permission from the mortgage company.” Thus, you must first seek permission from the mortgage company – which has no motive to agree, unless your mother agrees to be bound by the terms of the mortgage and note.
Alternatively, you could bypass getting permission by paying off the old mortgage with a refinance (a new mortgage) on which your mother is a cosigner. As part of obtaining the new mortgage, a new deed would be generated making your mother a co-owner. She should realize, before agreeing, that she’ll be taking on full liability to make 30 years’ worth of mortgage payments on her own. If she needs to move to a retirement community in ten years, she’ll still be legally bound to make the mortgage, tax and insurance payments.
Second CS: you need to take two steps, the first being probate of your husband’s Will. Both of you are currently in the deed records as co-owners, and his Will says that you inherit his portion. But his Will has no legal effect until it is admitted to probate. You will become Executor (if he named you as such) and can transfer his half interest in your home into your name so you will be sole owner. Hire a qualified attorney to assist with the probate (a Certified Elder Law attorney would be a good choice).
Your second step is then similar to CR’s situation. To make your daughter a co-owner, you’ll need permission from the mortgage company if there is a due on sale clause in the mortgage. Or you can refinance and add her name to the deed and mortgage as part of the refinance. Again, she is not only becoming co-owner; she is also becoming legally obligated to make the mortgage, tax and insurance payments if you cannot do so. Be sure she knows the extent and depth of that obligation.
Both CR and CS have left one thing unsaid: when you become mother-daughter partners, what happens if either partner dies? At the least you should all modify your own Wills to say how your shares will pass if you die (again, see that Certified Elder Law Attorney). Additionally, you could ask for a right of survivorship to be added to the deed that creates your co-tenancy (it is an unusual provision for a deed, and will not be included unless you insist upon it).
Paul Premack is a Certified Elder Law Attorney practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, March 25, 2011