Legal Question in Real Estate Law in California
If real estate property title is held as husband and wife, can one of them quit claim their interest to a third party eventough there is still a mortgage loan balance owed on that property? I would think that one cannot grant their portion of any real estate until the original mortage is paid in full. If this is true, what are the consequences in such a transaction which can be brought forward by the lender who has no knowledge of the quit claim transaction?
2 Answers from Attorneys
Yes, one can transfer title whether there is a mortgage or not, but the terms of the mortgage agreement probably states in that situation the loan is accelerated and all becomes due.
First, "husband and wife" is not a way of holding title to real property. You probably mean "as community property," but if thetitle actually says husband and wife, a court would interpret that to mean community property.
Family Code section 1102(a) provides that both spouses must join in executing any instrument whereby community property or any interest therein is sold, conveyed or encumbered.
The Family Code also requires spouses to deal with each other and with their property with the utmost good faith.
As Mr. Shers says, the loan agreement probably contains an acceleration clause that makes the entire principal balance due and payable upon the sale of the property, or any interest therein. Lenders don't always invoke these clauses, and a borrower can sometimes get them waived, often by paying a fee. Some lenders are pretty cooperative when the sale of a part interest is due to a divorce court order or property settlement.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
