Legal Question in Real Estate Law in California

Re: refinance and change of title

Be careful not to confuse liability on a loan secured by real estate with ownership of the real estate.

When your parents deed property to you, and the deed is recorded, title in the property will then stand in your name. In this context, 'title' means legal ownership. When people say 'my name is on title' they mean that a deed is recorded on which their name appears as an owner or the owner.

When real property is financed, the lender obtains (in some states including California) a promissory note under which the borrower agrees to make (usually) periodic payments of principal and interest. The lender also obtains a deed of trust to secure the borrower's promise to pay on the note. If the borrower fails to pay, the lender can foreclose, resulting in a trustee selling the property to raise funds to pay off the note (with excess sale proceeds to other lienholders, then to the borrower). The borrower is often the same as the current owner (person 'on title') but this is not necessarily so. Selling the property doesn't automatically take the borrower off the note. This has to be done in a separate, but usually related transaction, often through the same escrow in which the property changes ownership. Sometimes, however, the terms of sale include the prior owner remaining liable for the existing loan, either solely or in addition to the new owner.

Most real estate transactions are handled by professional real-estate agents and escrow or title companies who are equipped to handle such documentation and explain it to the parties. Unless you will be using an agent and a title/escrow company, you should consider using a rela-estate attorney who practices in the state and county where the property is located to advise you on title and loan-liability matters.