Legal Question in Real Estate Law in California

Re: quit claim deeds

Use a grant deed instead of a quitclaim.

Re: quit claim deeds

Yes it can be done, however, you want to be sure you complete both the deed and the Preliminary Change of Ownership form correctly. I would strongly suggest that you contact a title company at a minimum to prepare the deed and issue a new title insurance policy reflecting the new ownership. The title company you used to buy the property should be willing to issue a title policy at a reduced cost. Alternatively, you should have an attorney draft the documents for you so it is vested correctly, and the Preliminary Change of Ownership Report is filed correctly to avoid reassessment of their 1/2 interest. From a tax perspective, you need to be sure you consult your tax advisors (as should they) about the implications of such a transfer.

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Re: quit claim deeds

I agree generally with Mr. Gibbs, and I see no advantage to a grant deed. One aspect that hasn't been mentioned yet is whether a transfer of an interest in the property is going to violate any covenant in any financing you've done on the house; there may be a due-on-sale or similar restriction that could require you to get a waiver from the lender. Look at your loan docs carefully.

You also didn't say whether the transferees are getting a bargain price for their half interest or are paying more or less full market value for it. A below-market or fictitious consideration for the 1/2 interest might trigger a liability for Federal gift tax.

Ordinarily, there are issues with future capital gains taxes and with reassessment for property tax purposes, but if the home is recently purchased, these should be minimal effects.