How to Transfer Property Title to Family Member
When a property owner wants to transfer property title to any family member, such as a parent, child, brother, sister, aunt, uncle, niece, nephew, or spouse, the property owner simply needs to sign a Warranty Deed to transfer the property.
You cannot simply scratch out a name on a prior deed and write in the new name. You need a new Warranty Deed.
It is not recommended to transfer title to property to a minor. The minor will not be able to transfer the property until he or she turns 18. If you want to transfer property to a minor, you should consider a Trust for the benefit of the minor.
Good to know: When you transfer a house deed to a family member in Texas, it is helpful to understand the terms Deed versus Title.
Property Deeds are the legal documents used to transfer Property Title.
Property Title is the legal right of ownership of the property.
Your Warranty Deed needs:
Good to know: A Warranty Deed must show the address for the new owner (the Grantee). However, the deed does not need to show the address for the Grantor. The Grantee’s address is required so that the tax office knows where to tax bills.
Note: The Warranty Deed must be signed by the Grantor in front of any notary. Keep in mind that the county clerk will not record a document that has not been properly signed and notarized. THIS IS TO PREVENT FRAUD
Your signed and notarized Warranty Deed needs to be filed in the property records in the county clerk’s office of the county in which the property is located.
The county clerk will charge a recording fee of about $30 to $40, depending on the county. The fee should be paid by a cashier’s check or money order.
Once a Deed has been recorded by the county clerk, the clerk’s office will return the Deed to the new owner. Alternatively, you can take your deed to the clerk’s office personally and have it recorded while you wait. Remember, keep your recorded Warranty Deed in a safe place.
Transfer House Title to Family Member in Texas
Most transfers of house title to family members in Texas are gifts, which simply means the family member is not paying the owner for the property. The house transfer is a gift.
However, some transfers to a family member are purchases, which means the family member pays for the property. The payment can be in the form of cash or services, paid or rendered in the past, present or future.
Alternatively, the transfer may be Owner Financed which may limit gift taxes.
Good to know: To be valid and enforceable, the transfer must be in writing and signed by the owner. The document should be filed with the County Clerk for the County in which the property is located.
For example, you cannot simply say that your grandfather said he wanted you to have the property. A proper Warranty Deed signed by him in front of a notary is required.
Furthermore, if grandfather did not sign a proper Warranty Deed before he died, all of his heirs inherited the property.
Note: When a parent dies, one or more of the children may not automatically inherit the property. You will need an Affidavit of Heirship or a probate order to identify the heirs as the new owners of the property.
Just because you live in the house and pay the property taxes or the mortgage on the property DOES NOT MAKE IT YOUR PROPERTY. You need a Deed.
Should I Use a Quitclaim Deed to Transfer House Title?
It is important to note that a Quitclaim Deed should never be used to transfer house title in Texas. A Quitclaim does not TRANSFER TITLE.
Good to know: Quitclaims are used to transfer property in many states, but these deeds do not transfer property title in Texas. Instead, this document relinquishes or quit claims a person’s interest in a property. The property title or ownership is not transferred when you use a Quitclaim Deed in Texas.
Keep in mind that a mortgage company and title company will require a Warranty Deed.
Transferring Ownership of Property from Parent to Child
We recommend using a General Warranty Deed for transferring ownership of property from a parent to a child or to any other family member. Keep in mind, it is not recommended to transfer title to a minor. Consider a Trust.
Note: When you use a Gift Deed, you are actually using a Warranty Deed that says it is a Gift Deed. This means no cash was paid for the transfer. A Gift Deed is a Warranty Deed. It is a Gift Deed because nothing is given for the deed.
A General Warranty Deed or a Gift Deed is a legal document that transfers the title to the property from the current owner to the family member.
Good to know: The deed needs to be:
1. Signed by the current owner.
2. Legally identify the property that is being transferred.
3. State the full name and address of the family member receiving the property.
The family member receiving the property does not need to sign the document. Only the person transferring property signs the deed.
If you cannot find your current deed for the property, no worries. The county clerk in the county where the property is located should have a copy of your deed.
About Gift Deeds for Transferring Real Estate to Family
Good to know: Be aware of Federal Gift Taxes when you use a Gift Deed for transferring real estate to family. The federal government may charge you a gift tax if you give your real estate property to a family member. Gift taxes are paid by the person giving the property, not by the person receiving the property.
There are many exemptions and exceptions to the gift tax laws and the gift tax laws change periodically. We recommend before you make a gift of property that you contact your tax advisor to properly structure the transfer so as to limit tax consequences of the gift tax laws if possible. Your tax advisor may suggest an Owner Finance or an Installment Sale.
Additionally, there could be a capital gains tax consequence if you transfer the property to a family member for a sales price higher than you paid. Again, we recommend before you make a sale of property, you contact your tax advisor to properly structure the transfer so as to limit tax consequences of any capital gains tax.
In some cases, an Owner Finance transaction rather than a gift may be more advantageous to the parties. An Owner Finance requires three documents: a Warranty Deed, a Promissory Note and a Deed of Trust. Owner finance may also be referred to as Seller Finance.
Can I Partially Transfer a Deed to a Family Member?
Depending on what your goal is for the property, you may be able to transfer a portion of the property or a partial interest in the property using a deed to a family member.
Transfer a Portion of the Real Estate Property
If you only plan to transfer a portion of the real estate property, such as 1 acre out of 2 or more acres, you will need a survey of the property being transferred before you can use a deed to transfer that portion of the property. You will need a surveyor to prepare the survey.
Good to know: If you have a prior survey, call the surveyor and ask for an update to identify the tract you are transferring. It may save you money.
Keep in mind, a copy of that survey will need to be attached to the deed when it is filed in the county deed records.
Transfer Partial Interest in the Real Estate Property
An owner can transfer a partial interest in the real estate property, such as 50% interest, to a family member so that there are two or more owners.
Keep in mind, the same gift tax consequences as described above may apply.
Importance of a Right of Survivorship with a Partial Transfer
In Texas, property co-owners are not automatically Joint Tenants with Right of Survivorship or JTWROS. In some states, co-owners are Joint Tenants with Right of Survivorship; NOT IN TEXAS. A separate survivorship agreement is required.
Good to know: BEWARE that adding a person’s name to a title does not automatically mean that the person you are adding to the property title will receive the entire property when you die. This applies to spouses also. Texas differs here from some states.
Any co-owners should consider signing a Right of Survivorship Agreement so that the surviving owner receives the deceased owner’s interest in the property.
Without a Survivorship Agreement, the property will pass to the heirs of the deceased owner, NOT to the surviving owner. Once again, this applies to spouses as well. Simply adding a person to your title does not create Joint Tenants with Right of Survivorship.
We recommend if you add a name to the title, including your spouse, that you and the new co-owner consider signing a Survivorship Agreement. This simple document can save a lot of hardship when one owner dies.
When preparing Warranty Deeds to add family members to a property title, Texas Property Deeds will prepare a Warranty Deed with Right of Survivorship.
If you do not want your co-owner to receive your interest of the property when you pass, do not use a Survivorship Agreement. In that case, the property will pass to your heirs instead of your co-owner. Or you might also consider a Transfer on Death Deed.
Transfer on Death Deed to Transfer Ownership of a House to Family Member
A Transfer on Death Deed is another option to transfer ownership of a house to a family member. However, with this deed, the transfer happens upon the death of the current owner. A Transfer on Death Deed needs to be signed by the owner before he or she dies, and it must be filed before he or she dies.
Another good reason to use a Transfer on Death Deed is if there is a mortgage on the property. You no not need the mortgage company’s permission for a Transfer on Death Deed.
Good to know: With a Transfer on Death Deed, the property passes to the new owner immediately upon the death of the owner without the need for and the cost of probate. Also, the current owner can designate one or more persons to receive the property upon the death of the current owner.
If you have any questions about how to transfer a house deed to a family member in Texas, call and speak with attorney Scott Steinbach at 972-960-1850. There is no fee for your call. Or email him at email@example.com.