Legal Question in Real Estate Law in California

in 2011 our son asked if we would co-sign on a mortgage. He said his credit was not good enough. We said we would but we wanted assurance he would make it good. He said he had or would have sufficient funds to pay back all of the costs of buying the home. We agreed and he paid back all costs involved. He has since made good on all mortgage payments and all other costs of his house. We then filed and recorded a revision to the Grant Deed making him a co-owner of the property. We have failed though to advise the lender and the insurance companies of this fact. What is CA law regarding assumption/transfer of property/mortgage between Parents and Child? Would I be subject to having the loan called if I advise the lender of son's addition to the Grant Deed? Are there other factors I should be aware of?

Thank you


Asked on 7/13/16, 1:50 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Most deeds of trust contain a so-called "due on sale" or alienation clause which basically allows the lender to terminate the loan and force pay-off in full if the property or any substantial interest in the property securing the loan is sold or transferred. However, in my experience these clauses are seldom if ever invoked by the lender when the transfer is within a family and the loan is being kept current. Sometimes, when discovered, the lender requires the documents to be re-drawn and charges a fee for this. In any case, I think the prudent thing to do is to contact the lender, find the right individual, and explain the situation. Fixing things up should be easy, relatively inexpensive, and will take a load off your mind. I could be wrong, but most lenders really love their good-paying customers.

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Answered on 7/14/16, 8:12 am


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