Legal Question in Bankruptcy in California

Transfer of Home

My elderly, widower father owns home in Los Angeles. My wife and I have been taking care of him for free for past two years. He's always spending more than he makes (credit cards). We'd like to buy house from him (family thinks its great idea). We'd buy out rest of principal on his mortgage (about $225k). House is worth about $450k. After his passing, would his creditors still have right to the house because we purchased for less than fair market value? We're really interested in owning home... not much in LA for $225k. He is interested in getting out from under mortgage... not concerned about leaving inheritance (my brothers don't even care either). But what about his inevitable debts when he passes?


Asked on 12/03/01, 9:12 pm

2 Answers from Attorneys
Mark Markus Law Office of Mark J. Markus

Re: Transfer of Home

Yes, if you buy the house for less than fair market value, that can be considered a fraudulent transfer and his creditors can seek to recover the difference in value for up to 4 years after the transfer.

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Answered on 12/03/01, 9:23 pm
Robert Miller Robert L. Miller & Associates, A Law Corporation

Re: Transfer of Home

There is a law in California that creditors can use to declare a house part of a "fraudulent transfer" if it was for anything less than full value, and ESPECIALLY if it is to a family member. The family member status (also known as an "insider) is a red flag for creditors.

You can still do it, but just be warned that if a creditor files suit, this could be messy and expensive.

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Answered on 12/04/01, 1:55 pm


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