Legal Question in Real Estate Law in California

Re: quit claim deed

If the owner of property subject to any mortgage transfers ownership of the property, it may, but doesn't necessarily always, trigger a due-on-sale clause in the mortgage. Lenders can and often do waive the due-on-sale provision, sometimes for a fee.

A transfer by quitclaim would be the equivalent of a sale under most due-on-sale clauses.

As far as I know, almost all if not all reverse mortgages become due and payable when the last borrower moves out, whether due to death, moving to a retirement or nursing facility, or because of sale. Further, I doubt that sale (or transfer of title by quitclaim) would be acceptable to the reverse morgage lender even if the borrower/seller remained in possession under some sort of deal with the grantee.

So, my conclusion is that what the treasurer is proposing is indeed very likely to "cause more problems" and unless a lawyer experienced in reverse mortgages examines all aspects of the deal and blesses it, I would avoid it like poison.