How to Transfer Ownership of a House Without Selling

Title vs. deed: The deed is the physical legal document used to transfer ownership, while the title represents the legal rights to the property. Think of the deed as the paperwork proving the title has been transferred.

As noted above, the most common type of deed used when gifting a home is the quitclaim deed. This is because a quitclaim deed simply transfers whatever ownership interest the grantor has in the property without making any guarantees about the title’s validity. This is often suitable for family transfers where trust is high.

Depending on your location and specific circumstances, you may encounter other types of deeds, such as:

• Transfer on death deed (TOD): Automatically transfers the property to a named beneficiary upon the owner’s death. For this reason, it’s also known as a beneficiary deed.
• Gift deed: Some states, such as Texas and Virginia, offer this simplified option used for gifting property to family or friends, ensuring the transfer is tax-compliant.
• Grant deed: Provides assurances that the property hasn’t been sold to someone else, often similar to a warranty deed in practice.
• Statutory warranty deed: A deed that offers guarantees defined by state law, often used in specific regions.
• Fee simple deed: Conveys complete ownership of the property, with no restrictions or conditions. The new owner has the right to use, sell, lease, or pass it on to their heirs.
• Life estate deed: Grants ownership for the duration of a person’s life, after which it passes to a designated remainderman.
• Personal representative’s deed: Used by estate executors or administrators to transfer property on behalf of a deceased owner.

2. Identify the person receiving the house title

Determine who will take legal ownership of the property. This might be a family member, an organization, or another individual. Be clear about the recipient’s legal name and relationship to you, as this information must be accurately recorded in the deed.

3. Discuss the terms and conditions with the recipient

Before proceeding with the transfer, ensure that you and the recipient are on the same page regarding any terms, such as:

• Whether the transfer includes any conditions or limitations
• The timeline for completing the transfer
• Any responsibilities or liabilities tied to the property

This kind of clear, documented communication can help you avoid misunderstandings down the road, which can happen even amongst the closest family members.

4. Hire an attorney to prepare the deed

While DIY templates exist on popular sites like deeds.com and eSign.com, hiring a real estate attorney ensures the deed is correctly prepared and legally binding. An attorney familiar with the laws in your state can:

• Advise you on the best type of deed for your situation
• Address any legal questions about the transfer
• Draft the deed in compliance with state and local laws
• Inform you about tax and legal considerations
• Addressing potential complications, like liens or unpaid taxes on the property.

Do I really need an attorney? While it’s possible to handle a property transfer without an attorney, hiring one is a wise decision. Property laws can vary widely by state and even by county, so having legal guidance can prevent costly errors now and long after the transfer of ownership.

5. Review and sign the deed

Once the deed is prepared, review it carefully to confirm all information is accurate, especially the property’s parcel number, your legal name, and the name of the person or persons receiving the house. Both the current owner(s) and the recipient must sign the deed in the presence of a notary public to make it legally valid.

6. Record the deed

The final step is typically to record the deed with your county’s recorder’s office. This makes the transfer official and ensures the new owner’s title is part of public records. Be prepared to pay a recording fee, which varies by location.

Other factors to consider before transferring ownership

Before transferring ownership of a house, carefully evaluate how the decision will impact you, the recipient, and your financial goals.

• Capital gains tax for recipients: When a property is transferred, the recipient inherits your cost basis, which could lead to significant taxes if they later sell the property.
• Gift taxes: Transferring ownership as a gift may trigger gift tax obligations depending on the property’s value and annual gift tax exclusion limits.
• Transfer or stamp taxes: Some jurisdictions charge transfer fees for recording a deed, which may apply even if no money changes hands.
• Impact on property value: Depending on the recipient’s plans, transferring ownership could influence the property’s value or marketability.
• Family dynamics: Discussing the transfer with family members can help avoid future disputes or misunderstandings.
• Your ownership transfer objectives: Be clear about your reasons for transferring the property and ensure the approach aligns with your goals.

Transferring title vs. inheriting the house

Consider whether the recipient needs the house immediately or can wait until you pass away. Transferring ownership now may simplify their access to the property but could come with tax implications. Inheriting the property instead might allow them to take advantage of a stepped-up cost basis, which can significantly reduce capital gains taxes if they sell the property later.

Who needs to be informed about the ownership change?

After transferring ownership, notify the following parties to update records and ensure continued coverage or compliance:

• Your lender: If the property has a mortgage, lenders usually require notification or approval before ownership changes.
• Title company: Update the original title company so the new ownership is correctly reflected.
• Homeowner’s insurance company: Inform your insurer to maintain or transfer coverage to the new owner.
• Local tax assessor’s office: Notify them to adjust property tax records accordingly.
• Homeowners association (if applicable): Let the HOA know about the ownership change to maintain compliance with their rules.

Bottom line on transferring ownership of a house

Transferring ownership of a house without selling is a practical option in many scenarios, but it requires careful planning and execution. Make certain you have a clear picture of your goals and objectives, and consider how the transfer will impact your asset portfolio and the recipient’s financial journey.

A real estate attorney can help you choose the right type of deed, making the process smoother and avoiding unnecessary complications. Whether you’re transferring property to a family member, resolving legal matters, or planning your estate, taking these steps ensures the transfer benefits everyone involved.

If you are shopping for a new home, HomeLight can connect you with top-rated agents in your market. Our free Agent Match platform uses data-driven insights and thousands of reviews to pair you with local agents proven to deliver results. If you are buying and selling at the same time, check out HomeLight’s Buy Before You Sell program.

Header Image Source: (Roger Starnes Sr/ Unsplash)