Legal Question in Real Estate Law in California

Re: Quit Claim Deed???

I think you are asking the wrong question - instead of asking "is this the proper way to do it?" you should be asking "Is it proper to do this?"

To answer the question asked, yes, a quitclaim deed will be effective to take your name off legal title and transfer your interest to your mother (assuming it is properly filled out).

However, there are several possibly adverse consequences you should consider:

(1) Your loan agreement might have a due-on-sale clause accelerating the due date upon your sale of your interest, even if to your co-owner. If this were the only problem, the lender might waive the provision, probably for a fee.

(2) You need to be careful to avoid having the interest conveyed reappraised. Ordinarily, a transfer between family members is exempt from reappraisal and you will keep the old and presumably lower Prop. 13 value, but I'm not sure about a child-to-parent transfer and you need to see what your county requires in the way of paperwork to claim the exemption.

(3) Transfers of property create capital gains (or losses) that have federal and state income-tax consequences and perhaps gift tax consequences (generally unfavorable ones). Same comments apply to the 2002 transaction, by the way.

(4) Here's the biggie. Transfers of property without payment of full market value, especially between close relatives and when there is no change of possession, are likely to be held fraudulent. Any transfer of property made with the intent, or having the effect, to "hinder, defraud or delay" a current or prospective future creditor is defined by statute as fraudulent. See the Uniform Fraudulent Transfer Act, Civil Code sections 3439 to 3439.12. A creditor is likely to learn about a transfer of real estate by checking the public records, then attack the sale in court, which may result in a judgment un-doing the transfer and holding both participants (transferor and transferee) liable for damages.

In your case, you may have a good defense to a fraudulent transfer charge, since you apparently acquired your interest by a kind of mistake and didn't pay for it in the first place (2002), so conceivably you could argue that you weren't trying to hide an asset unlawfully, but were only restoring it to the rightful owner.