Legal Question in Real Estate Law in California

Re: My Mothers house.

First, it is very easy to concoct a legal theory why you are entitled to damages and file a suit based on that theory, whether or not the theory will actually hold water. Therefore, I cannot say you won't be sued. The more important question is whether you have defenses, and if so, how good are they.

You left out one essential fact: the relative timing of the accident and the grant of the house. If the grant of the house was made BEFORE the accident, you're on relatively firm ground and could probably successfully defend a suit by the injured party.

If, on the other hand, the house was transferred AFTER the accident, the injured plaintiff can allege that the transfer was fraudulent because it was made with intent to 'hinder, defraud or delay' a creditor. The intent can be inferred from the facts and does not need to be proven specifically by the plaintiff. Such a charge would be very difficult to defend, and the transfer of the house would very likely be voided and the house made subject to a judgment lien.

Where this would leave you and your lender with respect to any loan you took out after receiving title to the house (after the accident) is a tougher question. My guess is that if the lender knew, or should have known, what was going on, the lender will lose the collateral and will have an unsecured loan. If, however, as is more likely, the lender is an innocent bystander without actual or constructive notice that there was a fraudulent transfer, the lender is still secured.

The bottom line is that the injured party and perhaps the lender as well can go after both the house and the money you borrowed using the house as collateral and/or the things you bought with the money.

Again, if the transfer of the house preceded the accident you are on MUCH firmer ground, but this is no guarantee you won't be named in a suit.

If you are sued (served with a summons and complaint), get a lawyer at once. You probably need someone with trial (defense) specialization rather than a real-estate lawyer at that point.

Finally, the transfer of a house as a gift always raises questions as to intent. It is often not a good estate-planning tool and may have unfavorable tax consequences. Your mother should have borrowed herself and lent you the money. The fact that the transaction is unusual may be suspicious to the plaintiff's attorney and may result in an investigation of the facts.