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.

Published: Jul 9, 2006