Dangers Of Quit Claim Deed
REM #F706
By Ilyce R. Glink
Summary: A reader is hoping his mother will quit claim deed a home to him. Ilyce warns him that the mortgage company will have a problem with this deal and it will also create estate problems down the line.
Q: My mother owns the house that my wife and I live in. We would like her to
quit claim the deed to us but still hold the mortgage as it would be advantageous
to us.
Would we be able to take advantage of the homestead exemption if the property was quit claimed to us.
A: Once you own the property, you should be able to take advantage of the homestead
exemption. But there are other issues to be considered.
First, if the mortgage company finds out that your mother has sold or given
away the property, they might decide to call the loan. When you take out a mortgage,
you pledge the house itself as collateral. If the collateral is gone, what's
to stop your mother from deciding not to pay the mortgage?
According to the terms and conditions of the typical mortgage, your mother
is required to hold title to the property until the mortgage is paid off. But
under certain circumstances, title to a home can be transferred between family
members. You should consult with a real estate attorney to determine whether
your transfer falls within these guidelines.
Finally, giving you the house via quit claim deed you the house can play havoc
with her estate. You would be given the house at her cost basis. If you inherit
the property someday, you will receive it at its current market value.
You and your mother should sit down with a real estate attorney or estate planning
attorney to develop a plan that will help you achieve your goal, but not leave
your mother vulnerable to a claim on the mortgage.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
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