Legal Question in Real Estate Law in California
I am in the process of signing Loan Modification Agreement with my mortgage company. My wife passed away last year.
There will be a $100,000 deferred principal balance. The agreement says if I sell or transfer an interest in the property, this $100,000 is payable immediately.
My son is helping me for my monthly living expenses. I want to add his name to the title once the loan modification is complete. My question is if I add him in title, is that considered "transfer an interest in the property" and have to pay that $100,000 immediately?
Can you suggest any way where I can add my son to the title and yet not have to pay this $100,000 immediately.
Thank you very much for your advice.
With best regards
Swami
2 Answers from Attorneys
That most certainly would trigger the repayment obligation. In addition, it is a REALLY BAD idea to add someone to title while you are still alive. It triggers all kinds of negative tax consequences. It is WAY better to put them in a will or trust to receive the property when you pass away. It will potentially save thousands and thousands of dollars in taxes.
Swami,
A loan modification is not always a good thing. You think you're getting a good deal, but one misstep and they can take you right back to the original mortgage. You would be back where you started.
If the plan is to leave your asset to your son, you might be better off doing a refinance with your son so that you can both be on the title and the deed of trust. You may also be better off with a Chapter XIII liquidation where you can dispute the arrears, penalties and attorney fees that the mortgage servicer has tacked on to your principle balance.
I'm guessing that is a lot of the $100,000.
Talk to an attorney before you sign anything.
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