Legal Question in Real Estate Law in California

You would run into two problems in doing what you suggest. First and most significantly, without the lender's consent the other person would not be allowed to take over the payments. As between you and them, you may agree that they will make the payments, but you would have to still be liable on the loan, not them. And if the other person can get the lender's consent, then the would just take out a loan and buy it from you. In addition, if you deed the property to them, without them taking over the loan or getting their own loan, it will almost certainly be an event of default under the terms of your loan, and the lender could call the entire loan due and payable immediately. The second problem is that as the real estate bubble burst, a lot of people found themselves in your shoes, and a lot of other people started coming up with ways of taking advantage of the distressed property owners. As a result, there is now a fairly large and complex body of law restricting how and when someone can help bail you out of a distressed property. Violating those laws can carry serious penalties, some of them criminal. So unless you either find someone who doesn't realize the trouble you can get in, or someone who is very well versed in the laws in this area and knows how to structure a deal with you legally, you are going to have trouble getting anyone to enter into such a deal with you.

I agree with Mr. McCormick, but I see three problems.

1) It requires the lender's consent to assume the loan payments. There are two ways to take title in California with an existing deed of trust or mortgage: taking subject to the deed of trust, and taking subject to the deed of trust, coupled with an assumption of the loan. When property is conveyed to a third party, the property is always subject to the existing deed of trust, which means it can be foreclosed on in the event of default, regardless of who has title or is in possession of the property. Negotiating an assumption with lender approval allows the lender to determine the credit worthiness of the new obligor.

2) A conveyance without lender consent triggers the due on sale clause, which is standard in most deeds of trust. This allows the lender to foreclose, despite the fact that the new owner is making payments.

3) As Mr. McCormick points out, there are legal restrictions on structuring a sale to avoid foreclosure through foreclosure consultants.