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15 Major Risks You Take by Adding Someone to Your Property Deed

Making changes to your deed might seem like a smart move, but it can come with serious financial and legal consequences.

By Adam Palasciano

Edited by Lauren Wellbank

Updated Feb. 11, 2025

Your home’s deed is the legal document that establishes ownership of your property. Adding someone to the deed transfers some or all of your ownership to them, giving them legal rights to the property.

While there can be benefits — such as simplifying inheritance matters — there are also major risks that could impact your ability to sell, refinance, or even keep control of your home.

If you're looking to build wealth and make money moves, you need to understand the potential downsides of this decision. Here are 15 risks to consider before signing over part of your property.

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You can’t take it back

Once someone is added to the deed, they become a legal owner. You cannot remove them without their consent, even if your circumstances change. If they refuse to cooperate, you may need to go to court, which can be a costly and lengthy process.

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It can get complicated

Adding someone to your deed changes your legal status from sole owner to joint owner. This can impact your ability to sell or refinance the home. Additionally, transferring assets could impact Medicaid eligibility for older homeowners, making it harder to qualify for benefits.

You may expose yourself to additional liability

If the person you add has debts, legal issues, or goes through a divorce, their creditors or ex-spouse may try to claim their portion of the property. In some cases, this could result in a lien being placed on your home or even a forced sale.

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You’ll likely need permission from your lender

If you have a mortgage, adding someone to the deed could violate the terms of your loan. Many lenders include a “due-on-sale” clause, meaning they can demand full repayment if ownership changes. Failing to get permission beforehand could put your home at risk.

The person you add may be subject to IRS gift taxes

Transferring ownership is considered a taxable gift by the IRS. If the share given exceeds the annual exemption limit ($19,000 in 2025), the recipient may be required to file a gift tax return. This could lead to unexpected tax liabilities.

You could owe transfer tax

Many states charge a real estate transfer tax when ownership changes, even if no money is exchanged. The rate typically ranges from 2% to 4% of the property’s fair market value. For example, if you add someone to a home worth $300,000, you’ll pay a transfer tax of 2% of one-half the value, and you could be on the hook for a tax bill of $3,000.

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You may lose control

A co-owner has legal rights to the property. If you want to sell or refinance, you’ll need their approval. If they disagree or become uncooperative, you could be stuck in a legal battle over your own home.

You may create family conflict

Adding one person to the deed while leaving out others can cause disputes, especially when it comes to inheritance. Family members who expected to inherit the home may feel left out, leading to resentment and even legal challenges.

You may cause emotional distress

Homeownership comes with responsibilities, and not everyone is prepared to handle them. If the person you add struggles with finances or home maintenance, it could lead to stress and tension between co-owners.

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There could be joint tenancy issues

Depending on how the deed is structured, ownership rights may automatically transfer to the other person if one owner passes away. If that’s not your intention, you could accidentally disinherit other family members.

You may expose yourself to the co-owners creditor

If the co-owner is sued or files for bankruptcy, their share of the home could be seized to satisfy debts. This could result in legal complications or even the forced sale of the property.

It could result in a real estate partition

If disagreements arise, the co-owner could file a lawsuit to force the sale of the home. This process, known as a partition action, could require you to sell the property against your will, perhaps at an unfavorable price.

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There may be mortgage complications

Even if your lender doesn’t immediately enforce a due-on-sale clause, adding a co-owner could make refinancing more difficult. Lenders consider ownership changes when approving loan modifications, and additional owners may complicate the approval process.

You may impact your estate planning

Adding someone to your deed can override your will or trust, affecting how your property is distributed after your death. This could unintentionally exclude other heirs or create legal disputes that delay the settling of your estate.

You could face capital gains tax issues

If the person you add to the deed later sells their share, they may owe capital gains tax on the profit. This could result in an unexpected tax burden for them — or for you, if you share ownership responsibilities.

Bottom line

Adding someone to your home's deed is a significant legal step that can have long-term financial and personal consequences. While it might seem like a simple way to share ownership or plan for the future, it can create complex challenges that are difficult to undo.

Before making any changes, take the time to prepare yourself financially and consult with a legal or financial professional. Protecting your home now could help you withstand economic downturns and safeguard your wealth for the future. Would this decision truly benefit you, or could it create more problems than it solves?

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