Adding a partner to your property is common and the process is quite straightforward. It’s just the consequences of the process that you should be cautious about.
Every case is different when it comes to adding a partner to your property, so the Department of Land and Property Information recommends that everyone seeks legal and professional advice through the process.
This is because your property is one of the most expensive assets you commit to. If done incorrectly, adding someone to your property title can cost you financially in the long run. It's crucial to remember when you include your partner on your title they will have a share of property and will be involved in your mortgage.
If you plan to transfer a share in your property or renegotiate any mortgage, the first step is to contact your lender. Your lender will assess the financial situation of both parties and may or may not give you consent. If approval is given, your lender will most likely lodge all the documents. This can include the Certificate of Title after you have the Transfer Form stamped from the Office of State Revenue (OSR). There is usually a fee involved in this process.
- Married couples. Both involved in the property have rights to the property, so each individual would have a claim on the property regardless of whose names appear on the deeds.
- Adding a long term partner. By adding a partner onto the mortgage, you will both get fair rights if the property is sold. If you initially purchased the property, its wise to protect your investment under a ‘tenants in common’ arrangement. Speaking to a solicitor will help this process run smoothly.
What type of agreement should I get?
Although you may be in a perfectly happy relationship, circumstances may change in the future. If you do have equity built in the property, you may want to consider getting a ‘tenants in common’ agreement so you’ll get the shares back if you decide to sell the property.
When you purchase a property with one or more other persons in New South Wales, you will need to specify if you’re holding the property as joint tenants or as tenants in common. This will be specified on your contract and in your transfer document. Before entering any agreement, legal advice should be sought.
- Joint tenants. Both parties will own the property in equal shares and if one of the owners die then their share will automatically pass onto the other owner (even if you have a will). This type of agreement is most popular among married and long term de facto couples.
- Tenants in common. Both parties can choose to own the property, either in equal shares or unequally. For example, one party would own a third and the other owns two-thirds. If one of the owners die, then their will decides who gets the ownership share. This agreement is popular with owners who don’t want their share to go to other owners, such as friends or business partners.
Adding a long term partner to your property
John and Ling have been dating for three years and are ready to move in together. Ling already has a property in Dee Why, Sydney, while John still lives at home with his parents. The agreement is that John will move into Ling’s property, pay 50% of the upfront costs towards the mortgage and start making 50% of the repayments. Ling has already paid up to $100,000 of repayments, which means she already owns 20% of the property.
Ling and John approach the lender first to see if they can get approval. After reviewing their finances, the lender consents to adding John’s name to the title and mortgage. The lender also works with a third party legal service to obtain all the legal documents and a ‘tenants in common’ agreement - if anything were to happen to the relationship, Ling would own a 60% share of the property and John 40%. After Ling and John fill in the appropriate paperwork and pay the fee of $350 which the lender adds onto the principal, the house is now under both of their names.
|Upfront costs when Ling bought the property (including stamp duty, title transfer, legal costs)||$21,400|
|Upfront costs for John||$10,700|
|Loan amount already repaid by Ling||$100,000|
Even though adding a partner to your house title should be a joyous occasion, being realistic and prepared in the first place will avoid any surprises later. When you carry out this process, all parties should be aware of whether you transfer all, or part of your ownership of the property. Most importantly, be aware of both the personal and legal consequences.
Will I pay stamp duty when transferring my property into my partner's name?
In some cases, stamp duty is not payable when a partner is added to a property title. This includes married, de facto and same sex couples. To realise this exemption, you'll need to fill out an exemption form, which is available from your state office of revenue.
There are a number of conditions which must be met before this exemption is able to be realised, and these can change from state to state. As mentioned above, always check with your lender before carrying out any transfer of title or mortgage.
What forms do I need?
- Transfer form. This is available from the Land and Property Information website. To fill in the form correctly you should record your name as both the transferor and the transferee on the form and record your partner’s name as the transferee. You need to sign as the transferor and transferee, whereas the other party signs as the other transferee. If you think you’re eligible for a stamp duty exemption, log onto the OSR website. You must have the Transfer Form stamped or marked by the OSR to be exempt.
- Certificate of Title. This will be held by you or your current lender.
- Mortgage documents prepared by your lender. If you currently have a mortgage, your lender should be the first party to consult. They will provide you with any other relevant documentation to be lodged.
What legal documentation can I expect?
- A Grant Deed. By using a grant deed you will transfer all of your interest, ownership and rights to the property immediately. Upon signing a grant deed you lose all rights and have no further control over the property. If you are living there you immediately become a tenant and can be evicted by the new owner at any time.
- A Trust Deed. A trust deed is usually used when the property is secured for the purposes of carrying out an obligation that involves the home such as a mortgage or the repayment of an equity loan. If you do not repay the loan your home can be sold out from under you at a public auction.
- A Quitclaim Deed. A Quitclaim deed, much like a grant deed, immediately transfers all of your previous interest, ownership and rights concerning the property. A Quitclaim deed can be used to add or remove any person’s name on the original title document in a simple straightforward manner. However, a Quitclaim deed has no warranty as the grantee has the same power as the grantor. For this reason it can be the most suitable method to transfer property between family members, as gifts or special circumstances.