Q: Adding someone to the Deed or creating a Cohabitation Agreement?
I own a home, and my fiance lives with me and has put a substantial amount into the home. To protect her investment, we were looking into adding her to the title/deed. I am concerned about a few things I have read regarding this:
1. There is a mortgage on the home with an escrow account. Is due on sale clause an issue?
2. The mortgage is $502K and I believe there are fees based on that amount for stamps.
3. Is there a tax implication for either of us?
4. Will I lose the Homestead Exemption?
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A:
These are all good questions.
Quitclaim deed will not trigger loss of homestead exemption as to you. If your fiancé lives with you, she'll need to complete a separate homestead application. You will only pay tax to the county on the amount indicated in the quitclaim deed, so it is nominal. Your mortgage acceleration clause is a valid concern because typically it does apply. But realistically, what this will end up doing is you being financially responsible, and your fiancé will own part of the home without having any financial responsibility to the Bank.
Since you are in FL, I'd highly recommend doing a warranty deed and paying for title insurance. If you live in a single family home, it becomes especially important. Otherwise, you will lose title insurance when you execute a quitclaim deed.
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