Legal Question in Real Estate Law in California

Re: Deeds and family living trusts

Civil Code section 2924.6(a)(4) exempts transfers into an inter vivos (living) trust from due-on-sale type provisions of mortgages and deeds of trust. Thus, it is possible to do this without upsetting your loan, with some limitations - the law says it may be done "by an obligor (borrower)or obligors into an inter vivos trust in which the obligor or obligors are beneficiaries." In other words, the same people who owed on the loan and owned the house before the transfer to the trust must end up owning it beneficially, through the then-revocable trust, after the transfer. You can't use the transfer-to-trust to hand over effective ownership to heirs or other family members at that time.

The term "warranty deed" is unusual in California; most ordinarily, we speak of, and use, either a grant deed or a quitclaim deed.

I must also add that the question of whether it is "possible" to do such a transfer is separate from whether it is "advisable" or whether you will get good results if you try to select, fill out and record deed forms yourself. It's probably a good idea to place your major assets into your living trust, but beyond that, for example when an individual puts his or her individually-owned house into a family trust, other issues arise such as whether there has been a gift of the beneficial interest, who now controls the property, etc. You should have your trust attorney review the proposed transaction to assure that the result you get is the result you intend.