Legal Question in Real Estate Law in California

Re: Is it legal to get an escrow loan, buy the house, then quit claim it back 1

On its face, there is nothing illegal in what you are planning. But, my lawyer's gut tells me that there are important facts you are not disclosing. If you are representing to the lender that you are buying to be an owner occupant and you do not really intend to remain so for an indefinite time, you may be participating in a fraud on the bank. The loan may have a prepayment penalty, you better know going in. You do not reveal why you and your relative are engaging in this "transaction", but the details may make the transaction run afoul of the law. Taxes must be recognized and paid on any gain on these transactions to either party.

I suggest you sit down with a lawyer to figure out just what you are doing, why and what legal entanglements may ensue.

Re: Is it legal to get an escrow loan, buy the house, then quit claim it back 1

If you must represent to the lender that you already OWN the property in order to get the loan, (as is probable) then that is illegal because you are making a false statement to a lender (i.e., fraud). A lender loans to someone based upon their belief that the borrower has a "stake" in the property and something to lose if they do not make a payment. It sounds as though the owner is unable to get the loan himself due to either poor credit or possibly he has tax or judgment liens which preclude the making of a loan; if so, you are assisting him in perpetrating a fraud and subjecting your good credit to potential negative impact in the event that he, in future, is unable to make the payments on the loan, as it will still be in YOUR name. Also, everyone has a limit to the amount of credit they can qualify for, and you will be devoting a portion of your credit potential to this loan. You will be making a mistake to get involved in this.