Legal Question in Real Estate Law in California

Re: legal status on a deed of trust

First, I'd question whether you are joint tenants. Joint tenancy usually requires both tenants to acquire their interest simultaneously. There are ways to do this when one party already owns 100% of the parcel, but it takes special wording on the deed. You may therefore be tenants in common rather than joint tenants.

If your intention in making this gift was to avoid probate, you will not have accomplished this goal if you are tenants in common. Ony a joint tenant's interest passes automatically to the other joint tenant upon death. All other forms of co-ownership may involve probate.

Any substantial gift of property is likely to trigger a gift tax liability of the donor. Also, there may be capital-gains tax consequences. The transfer should be exempt from reappraisal for property-tax purposes if reported properly.

Because of the unfavorable state and federal tax consequences, attorneys generally recommend use of a trust rather than a transfer into joint tenancy as an estate-planning, probate-avoidance tool.

I do not practice in the area of tax law, so the discussion of tax consequences is just general information. You should consult a tax advisor (CPA or lawyer) about taxes possibly due now or upon a future sale of the property.

As to getting a loan, most lenders would expect both of you to have decent credit, and most would expect both of you to sign the papers and be jointly and severally liable for the payments. You (or the lender) will also need an appraisal, a title report, and insurance. The title report will clarify how title is currently held (assuming the quitclaim deed was recorded). Any existing financing in your name only would probably have to be paid off or subordinated. The loan proceeds would probably be paid to both of you by a two-signatures check and/or joint escrow instructions.