Legal Question in Real Estate Law in California

The first thing to do is figure out how you are going to handle the debt once she dies. Are you capable of making the payments on the loan, or a refinanced loan in the amount owed? If not, you are not going to be able to keep the house anyway, as the loan will come due when she dies and will have to be refinanced in the name the heir. If you can't do that, you'll have to sell it. If you are able to qualify, talk to the current lender about the situation and see if they will allow you to assume the loan when she dies, or refinance it to put you on it. If the current lender will not do that transaction, see if you can find another lender who will do a refinance with both of you on title. Once you find a lender who will accommodate you in a refi or modification, as part of that transaction you should be able to have your grandmother execute a deed from herself, to herself and you as joint tenants. Then when she passes, you will record an affidavit of death of joint tenant, attaching a copy of the death certificate, and the house will be yours. BUT this kind of transaction can have significant tax consequences. The purchase was recent enough that the capital gains tax issues that often arise in situations like this should not be material. There are, however, generation skipping gift and estate tax issues that could have an impact on this. So before you make any arrangements TALK TO A TAX PROFESSIONAL ABOUT THIS.

You would be better served to repost this question to the estate and probate section members, as there are a lot of factors that play into how one disposes of property when they pass away. There are substantial possible income tax consequences, and it is important to better understand the full nature of her estate, not just this one asset. I am truly sorry to hear about your grandmother's condition, and hope that she can find some peace during this trying time. You are doing the right thing by dealing with this now, and not waiting until she gets too ill to competently handle her financial matters.

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She can quitclaim deed it to you, she can put you on title as joint tenant, she could will it to you, she could set up a trust for you. None of them get around the mortgage obligations. Whoever wants to keep it will have to pay that or lose the house to foreclosure. You'll need to discuss the different tax consequences of those choices with a tax expert.