Legal Question in Real Estate Law in California

Re: Real Estate Quit Claim Deed

Probably not. There are some consequences you need to take into account:

1. Most home loans have due-on-sale or similarly-named clauses that could accelerate the loan, i.e. make it all due and payable right now, if there is a change in ownership. Some lenders will waive these clauses, often charging a handling fee, if the transfer is for a good reason such as a property settlement in a divorce. Look for the clause and talk it over with the lender.

2. Any change in ownership for less than full value may trigger a gift tax liability on the donor.

3. Any change in ownership is probably going to subject the transferor to reporting a capital gain or loss.

4. The property taxes will be reassessed on current market value (I don't think a transfer to a brother and sister-in-law is exempt from reappraisal).

5. Probably not a factor in this case, but a lot of times property is transferred below market value within a family is to avoid the transferor's creditors or those who might become creditors, e.g. by winning a lawsuit. This is fraudulent, and if the creditors find out (and with real estate, they easily can), both the transferor and the transferee can be sued and the transaction un-done.

Whatever you're trying to accomplish, there may be a better way to do it, such as by a lease where the rent equals the mortgage payment. I'd talk to a local tax advisor.