Legal Question in Real Estate Law in California

If this deal is "necessary" and you are committed to do it, you need to consider both how husband and wife hold their share, and how daughter holds her share. Two common ways for the married couple to hold title are "community property" and "community property with right of survivorship." If the daughter is to get a half interest, she can hold it as a joint tenant with the parents. She could also be a tenant in common with the parents, which would allow her ownership to be other than exactly 50%, e.g., she could hold a 1/3 interest that way. You need to rely upon a professional, such as a title or escrow company or an attorney, to write up the deed.

If you are under no compulsion to do this deal, however, I strongly recommend that you have a professional advisor - one not receiving a commission as a loan broker - review it for its tax and property-management consquences. You appear, for example, to be making a gift of one-half the value of the property.......probably triggering a gift-tax liability for the parents. You also may be forgoing the opportunity for your daughter to inherit the property and get a step-up in basis that will save her a bunch of capital-gains tax in the future.

I think you should ask a financial advisor to estimate the overall tax consequences on the family; then compare them with the benefit you might get from a lower interest rate, or taking out some cash, that you get from the refi.

Mr. Whipple gives an excellent answer. This is a matter that probably will involve tens of thousands of dollars if not handled in the best fashion. Please look at prior responses to the issue of a gift to a child of property; most of us strongly advise against it unless there are some very special circumstances involved.