The previous installments of our series on deed transfers revolved around joint tenants and LLCs in the District of Columbia. Today we will switch gears by taking a look at deed transfers as they relate to spouses and domestic partners in Montgomery County, MD.
Keep in mind that this is solely for Montgomery County – each county in Maryland has different rules. All of the scenarios below are solely for changing the title of the property – these transactions are not part of a refinance or a modification.
Scenario 1: A recently married couple now wishes to add the spouse to the title of the property.
This is the most common scenario: An individual purchased a property as the sole owner, was recently married and now would like to add his or her spouse to the title of the property. Fortunately, the county treats this as a tax exempt transaction, meaning that adding a spouse to the title of the property does not create a scenario in which transfer and/or recordation taxes need to be paid. The only costs are the recording fees (currently $60) and the cost of deed preparation.
Scenario 2: A married couple now wants to remove a spouse from the title of the property.
This scenario is the exact opposite of the previous scenario. The county allows transfers between spouses to be exempt. So either adding a spouse or removing a spouse is transfer tax and recordation tax exempt.
Scenario 3: A divorced couple that owns a property together in Montgomery County would now like to have one of the former spouses removed from title.
This scenario is exempt in the same way as the prior two scenarios. Montgomery County, Maryland, exempts transfers between spouses and/or former spouses.
Scenario 4: A recently married couple that owns property together would like to change the tenancy from Joint Tenants to Tenants by the Entirety.
Tenancy by the Entirety is only available to a married couple. (A thorough explanation of tenancy is available on our website. ) Many couples purchase their property prior to getting married, so they are unable to take title as Tenants by the Entirety. Consequently, they come back to us after their wedding and request a change in tenancy. Recording a deed for the sole purpose of changing the tenancy is tax exempt.
Scenario 5: An individual who is the sole owner of a residential property wishes to add his or her domestic partner.
Adding a domestic partner to the title of a residential property in Montgomery County is tax exempt. To obtain the tax exemption, the county requires an “Affidavit of Domestic Partnership” to be completed. Proof of domestic partnership is also required, which requires that two of the following must be provided:
1. Joint liability of the individuals for a mortgage or other loan or for a lease;
2. The designation of one of the individuals as the primary beneficiary under a life insurance policy on the life of the other individual or under a retirement plan of the other individual;
3. The designation of one of the individuals as the primary beneficiary of the Will of the other individual;
4. A Durable Power of Attorney for health care or financial management granted by one of the individuals to the other individual;
5. Joint ownership or lease by the individuals of a motor vehicle;
6. A joint checking account, joint investments, or a joint credit account;
7. A joint renter’s or homeowner’s insurance policy;
8. Coverage of one of the individuals under a health insurance policy of the other individual;
9. Joint responsibility for childcare, such as school documents or guardianship documents; or
10. A relationship or cohabitation contract.
Scenario 6: Domestic partners wish to remove one of the domestic partners from the title of a residential property.
Removing a domestic partner from the title to a residential property in Montgomery County is exempt in the same way that adding a domestic partner is exempt. Therefore, an “Affidavit of Domestic Partnership” must be completed, and proof of domestic partnership as defined in the prior scenario must be provided.
Scenario 7: Former domestic partners who are both on title wish to re-title the property to remove one of the former domestic partners.
This scenario is only tax exempt if the transfer is in accordance with a property settlement or a dissolution of a domestic partnership.