Do I Get Ownership Interest in Real Property When I Pay the Mortgage?
Under Iowa law, simply paying mortgage installments does not automatically grant you an ownership stake. A mortgage creates a lien on the property, securing the lender’s right to foreclose if the borrower defaults. The legal title remains with the deed holder unless a separate transfer of ownership occurs.
How Mortgage Payments Relate to Legal Title
The person named on the deed (the titleholder) owns the property. A mortgage lender holds a security interest, not title. When you make mortgage payments, you reduce the lender’s lien but do not gain title rights.
When Paying a Mortgage May Create an Equitable Interest
Iowa courts recognize exceptions where an agreement or conduct creates an equitable interest:
- Resulting Trust: If you paid most or all of the purchase price or mortgage under a mutual understanding that you’d gain ownership, you may claim an implied trust. The court reviews your agreement, payments, and relationship.
- Equitable Lien: If you advance funds to pay off a mortgage on another’s property under a promise of repayment, you may secure an equitable lien on the property.
Key Iowa Statutes and Legal Principles
- Iowa Code §558.64 requires a mortgagee to execute and deliver a satisfaction instrument within 45 days after full payment of the debt. Iowa Code §558.64
- Iowa Code §654.1 allows a party with an ownership interest—legal or equitable—to seek partition of real property. Iowa Code §654.1
Common Scenarios
1. Spouse makes all mortgage payments but the deed lists only the other spouse. Without a written agreement or court recognition of an equitable interest, the paying spouse remains an unsecured creditor.
2. Family member lends money to pay off a parent’s mortgage with a written promise to be repaid plus an agreed property share. This can create an equitable lien or trust interest enforceable in court.
3. Unmarried partners split mortgage payments but never add both names to the deed. A court may find an implied trust based on contributions and expectations.
Disclaimer: This article is for educational purposes and does not constitute legal advice. Consult a licensed attorney to discuss your specific situation.
Helpful Hints
- Obtain a written agreement if you expect ownership or reimbursement.
- Ensure your name appears on the deed to secure legal title.
- Keep detailed records of all payments and related communications.
- Ask the mortgage lender for a payoff statement and satisfaction document after you pay off the loan.
- Consult a real estate attorney to explore claims for an equitable interest or lien.