Having a VA loan can I add my fiancee on the tile of my house?

Having a VA loan can I add my fiancee on the tile of my house?

2 Answers

Yes you can. When you are the current titled owner, you are in control of who can be added to title. Lender has no say in the matter. Yet realize she will be part owner, yet not anything involving your loan. You go to sell the property or refinance, she will have to sign title again, even if not added to the next loan.

Your VA loan has a "due-on-sale" clause. Here is an excerpt of that clause from a recent VA loan agreement (your agreement could be worded differently depending when the loan was taken out):

"....If all or any part of the Property or any Interest in the Property is sold or transferred...without Lender’s prior written consent, Lender may require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if such exercise is prohibited by Applicable Law."

So if you transfer any interest in the property without the Lender's prior written consent they may require immediate payment of your loan. So the lender does have a say in the matter. The question is is the exercise of the due-on-sale clause prohibited by applicable law?

One law that is applicable is U.S. Title 12 C.F.R. § 591.5 Limitation on exercise of due-on-sale clauses. http://www.gpo.gov/fdsys/pkg/CFR-2011-title12-vol5/pdf/CFR-2011-title12-vol5-sec591-5.pdf Looking through that code there does not appear to be a limitation on the lender's ability to exercise the due-on-sale clause if there is a transfer of an interest in a property to a fiancee.

There is however a limitation on a lender's ability to exercise a due-on-sale clause when under §591.5(b)(v) "A transfer, in which the transferee is a person who occupies or will occupy the property, which is:"

"....(B) A transfer where the spouse or child(ren) becomes an owner of the property;...."

So if a person who occupies a property with a loan that has a due-on-sale clause transfers an interest in a property to their spouse the lender is prohibited from enforcing the due-on-sale clause.

You may want to wait until you are married to transfer an interest in the property to your fiancee who will then be your spouse and the lender will be preempted from exercising the due-on-sale clause. Please note that this is not legal advice. To see if these laws and contractual obligations apply to your specific situation be sure to contact an attorney competent in real estate law in the state the property is located.