Legal Question in Real Estate Law in California

Re: Stuck in a joint mortgage

The only way to be clear of it is to get the bank to agree to release you from liability for the note. If the note is a purchase money note, i.e. the loan was for the purpose of purchasing the property only, you have no personal liability anyway, but if a foreclosure occurs it will still affect your credit unless you are released from the loan.

Re: Stuck in a joint mortgage

Well, there are several options, each with a downside.

Refinancing and quitclaiming to her is the cleanest; gets you off the loan and title entirely. It is probably also the most difficult. However, if the lady wants to stay there without you, it seems reasonable that she should have full ownership at the cost of whatever it takes to get a new loan in her own name alone, including if necessary buying down the loan by putting up some cash.

Just walking away is the dirtiest. Your name will come off title and mortgage when the property is foreclosed. Is foreclosure likely if you walk away? It would do damage to your credit rating, but there's a good chance it wouldn't cost you a dime; you'd have to take a look at whether you are a possible target for a deficiency judgment, but if the only loan(s) you signed were for purchase money, you're probably safe.

Another possibility is to negotiate with the lender for your removal from the loan for a fee or a buy-down; you could ask her to pay for that in exchange for a quitclaim deed.

There is also the possibility of suit for partition. When properties have equity, this is a recommended choice. The court orders the property sold, often through a listing and agent by ordinary commercial means, and upon sale, a split of the net proceeds after paying off the loan. Many partitions are settled out-of-court by one party buying out the other. However, when the property is "under water," the results are less certain, and both parties may have to share in making up the deficit. Still, partition remains an alternative, because it's your right, and you don't need anyone's OK to file a partition suit, and there are few defenses.

Re: Stuck in a joint mortgage

Removing yourself from title is easy. You can just sign a quitclaim deed conveying the property to your ex-girlfriend. Hold on before you do that though because removing yourself from the mortgage may be quite difficult in this current market. To remove yourself from the mortgage, your ex-girlfriend will need to refinance the property in her own name (or buy the property from you). However, without any equity in the property, it may be difficult for her to obtain a new loan, unless she wants an FHA loan or has sufficient money in the bank. If she is interested in an FHA loan, or in discussing her mortgage options, I can refer her to a reputable mortgage broker.

At any rate, it's not wise to remove yourself from title while remaining personally obligated to pay the mortgage (for a multitude of reasons). Is your ex-girlfriend steadily employed? Does she make good money? Can she afford the property by herself? If the answers to these quesions are yes, you may want to consider having an agreement drafted between you two wherein she agrees to be solely responisible for the mortgage (and other expenses) in exchange for you relinquishing your interest in the property. Do not draft the agreement yourself. You are strongly advised to have a lawyer draft it.

Let me know if you have any further questions or would like our help. We practice real estate law and have experience with this type of scenario.