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  1. #1
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    Jan 2009
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    Default Taking Mother Off Title Deed & Property Tax

    Hi,

    I hope someone here can help me. Here is my situation:
    Two years ago I purchased my first home. While this is my home, both my mother's name and my name are on the title deed and thus both names are on the property tax bills that come through. This was done more so if something were to happen to me, the property was still hers, or should I want to transfer the property to her in the future if I got married.
    I am the only borrower on the mortgage on the house and have been the one paying the property taxes for the house.
    With the financial crisis my mother has found herself in financial trouble with her own home (her name only, I have no stake in those properties). We would however like to take her name off any paperwork on my home so I am not in danger of losing the property should she find herself in future financial problems. I know there is an option of a Quit Claim here. She has never claimed any financial stake in my home, nor paid any finances on it, or intended to claim it as an asset.

    1) Can she still quit claim if she has defaulted on her own loans for her own property? All bills on my own house have always been paid on time by me.
    2) In taking her name off the title deed and property tax, am I protected if creditors were to go after her?
    3) What happens if she goes into foreclosure on her properties or bankruptcy in the near future?
    4) Does her quit claiming transfer any of her debts onto me?
    5) Is there a better option here than a quit claim because I am the only person on the mortgage for the house?

    Thank you

  2. #2
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    Apr 2008
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    Texas (Dallas area)
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    Default Re: Taking Mother Off Title Deed & Property Tax

    Quote Quoting Angela627
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    Hi,


    1) Can she still quit claim if she has defaulted on her own loans for her own property? All bills on my own house have always been paid on time by me.
    2) In taking her name off the title deed and property tax, am I protected if creditors were to go after her?
    3) What happens if she goes into foreclosure on her properties or bankruptcy in the near future?
    4) Does her quit claiming transfer any of her debts onto me?
    5) Is there a better option here than a quit claim because I am the only person on the mortgage for the house?

    Thank you
    1) Yes she can quit claim back to you alone, however, her lenders can claim fraud.
    2) NO, her lenders can claim that she quit claimed the property to you to avoid their judgments and collections.
    3) In a bankruptcy the court wants to know about any transfered property in the 24 months prior to the bankruptcy, again they are looking for hidden assets.
    4) NO, you are not responible for anyone elses debts unless you are a cosigner on those debts.
    5) DO NOT quit claim anything right now. You need to contact a bankruptcy attorney before you do anything. This site can put you intouch with one in your area.

  3. #3
    Join Date
    Dec 2007
    Location
    Ohio
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    Default Re: Taking Mother Off Title Deed & Property Tax

    You maybe alright with your house. Hopefully you are a wonderful record keeper. There are several variables that the court will look at before they will go after it. Like the equity, how much there is and then they would only be able to get half. You need to get an attorney and so does your mother. Get more than one opinion as well, your house is on the line.

  4. #4
    Join Date
    Jan 2009
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    Default Re: Taking Mother Off Title Deed & Property Tax

    Thank you OhMy and gigirle for your help. A couple follow-up questions.

    Is it still considered an asset of hers if she has no equity interest in the property? I am the sole person on the mortgage and all loans and property tax payments have come from my own bank account.

    Foreclosure and/or bankruptcy on her part is worst case scenerio obviously, she is doing everything in her power to keep that from happening and will be/have been talking with her banks regarding payment options.

    If she were to stay on the title deed and ends up having to foreclose on her house, can the banks come after my property? Does the fact that I am the only one on the loan and have always had my name on the title deed (it not being a situation of her transferring just her to me) help in these matters?

    As it is my house does not have much, if any equity right now. I purchased at the high market and the property value has dropped significantly. I can however still make my payments. I just don't want to lose my house because of her own mess not related to me.

    Thank you!

  5. #5
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    Apr 2008
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    Default Re: Taking Mother Off Title Deed & Property Tax

    What state are the homes located in? this will make a big differience as the foreclosure laws vary from state to state. Lets just hope that your mom lives in California or Arizona.

    The state is the key to all of this.

  6. #6
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    Jan 2009
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    Default Re: Taking Mother Off Title Deed & Property Tax

    She does in fact live in California. We both do. I live in Los Angeles. She lives in San Diego.

  7. #7
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    Default Re: Taking Mother Off Title Deed & Property Tax

    Quote Quoting Angela627
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    She does in fact live in California. We both do. I live in Los Angeles. She lives in San Diego.
    OK, I never thought I would say this, but you are very very lucky that she lives in California.

    In California if she loses her home to foreclosure the lenders can NOT come after you for a deficiency judgment.

    Meaning; If your mom owes $400,000 on her mortgage and the lender sells the home for $150,000 in California they can NOT come after her for the shortage of $250,000. It is one of the only states in the country where this holds true. It may ruin her credit score but she will NOT owe the lender a dime for the deficiency. If her mortgage was her purchase mortgage (recorded with the deed when purchased) you are both in the clear.

    So, if her main problem is a possible foreclosure then you are in the clear. If her debt is mostly credit card then you may have a problem.

    As gigirle stated you need to keep good records to prove to a court that your house is YOURS and you only added your mom to the deed incase you died so your house would not have to go to probate.

  8. #8
    Join Date
    Jan 2009
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    4

    Default Re: Taking Mother Off Title Deed & Property Tax

    Well that's some good news out of this! Unfortunately she does have credit card debt as well, but she's slowly taking care of that. What kind of problems could come my way if she has CC debt though?

    Would it help to have a lawyer draft up a letter stating she has never had a equity interest in my property, that this is MY primary home, and putting her name on deed upon purchase was for incidental purposes. And just keep that on hand in case she can't unbury herself out of her financial troubles?

    If worst case scenero happens and lenders (home, credit cards) come after her, how much is the damage to me? Would they take my property entirely or just try to seize a monetary portion that she still owes? (example, my house value is now 550k, which sadly is how much my mortgage is despite the 200k down payment, and say she still owes lenders 100k) Does this end up affecting MY credit scores in any way?

    I have my monthly mortgage bills, property tax bills and receipts, what other kinds of paperwork/records I should be collecting to show the house is mine and mine only?

    Thanks so much, this really helps in trying to see how I can be protected against her financial matters.

  9. #9
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    Apr 2008
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    Default Re: Taking Mother Off Title Deed & Property Tax

    This will have no bearing on your credit report or FICO score.

    She may want to speak to a bankruptcy attorney NOW and consider a chapter 13 since most of her debt is credit card related.

    Now is the time to do this before any judgments are recorded.

    Speak to your moms attorney as well. Tell him about your home, and he will guide you as to if he feels it is proper for your mom to quit claim the house back to you. Since you can prove that no fraud existed, I would think that you should remove your mother off of your house ASAP. If anyone claims that your home was a hidden asset of your mom, you will be ready to prove otherwise.

  10. #10
    Join Date
    Mar 2008
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    Default Re: Taking Mother Off Title Deed & Property Tax

    Interesting thread and issues.

    Thought I chime in though I live in NY, not in CA, I had an attorney review a few issues for me when a few years back, my mother-in-law, who purchased a property with us, wanted to quit-claim her portion to us for estate planning reasons.

    We hired a CPA/Attorney specializing in "estate" planning to do the review.

    First, he told us that while it is common for people to just quit claim to get names off the deeds, it is undesirable as there are legal and tax ramifications. In your case, fraudulent conveyance, but in our case, taxation, because she would have not paid "capital gains" on the property so "quit claimed", should there be an audit.

    He identified several issues as to who owned what portion. Without any analysis or documentation, he tells us it is assumed the the parties owned it 50/50, unless it says so differently on the deed, or a separate agreement.

    The first issue is how much each party contributed. In our case we each put 50% down, so from that standpoint, that would indicate 50/50.

    The second issue was how was the taxes reported. In this case, the deal was we collect all the rent, pay on the expenses, take the deductions as well. So 100% of it was reported on our returns.

    The thrid issue was how the deed was written. In should have read Ms. A (my mom in law), with Mr. B, and Mrs B as tenants in common. Here it was written as the "grantees" being Ms A, Mr. B, and Mrs. C. According to his analysis, the written deed trumps the other issues, and taking strictly Mrs. A owns 33.33% despite putting down 50%.

    Fourthly, if there was a "written agreement" as to who owns what, that would override the deed. This agreement could read Mrs. A owns 10%, and Mr and Mrs. B owns 90%, for taking on managment, and making ALL capital improvements.

    At the time when this happened, around 1992, there was a RE crash here, just as we had one today, and he advised us we can "legitimately" BUY OUT Mrs. A's share. How you do it is you hire an appraiser, do an appraisal, determine the equity and then make a payment.

    This property was purchased for $180K, and in a RE runup reached 250K to 275K before the market crashed, and was worth about $200K at the the time. The mortgage was around 150K, with an equity of 50K. The idea was if we PAID her her share of the $50K, it would look fair and square.

    Now, the interesting part is how the 33.33% from the deed comes in. We only had to pay her 33.33% of the $50K equity. Did we have to dig up $17K to do the deal?? NO.

    The attorney arranged to have Mrs. A gift us both, the $17K, $8.5K each, by us giving her a note, and have the note forgiven, as anyone can give anyone else at the time $10K/year tax free.

    What does this have to do with you?

    What is the equity in your home?? With the RE crash, it could be really small. Here's a tip. Apprasiers usually ask what the appraisal is for, and we at the time, told him it's for "estate planning" and we need the LOW end for the report.

    Can you prove your mom owns less than 50%. If you paid all the taxes, and mortgage, you might me able to do it.

    If the equity is SMALL (low appraisal and ownership share helps) , you can BUY her out, giving her a SMALL note, and if you can substantiate the transaction, you should be OK. If you do it this way, no one can claim fraud.

    We gave her a note, went through a closing, did a refi to a lower interest mortgage while we were at it, and bought out her so called 33.33%.

    One final thing. We agreed to cover her capital gains if there were any arising from the transaction, but because of capital improvement, and other issues, when she reported the sale, it turned out to be a capital loss on her return.

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