Legal Question in Real Estate Law in California

Re: Transfer of Tittle/Property

A transfer of title, assuming there are no mistakes in the deed, will be legal and binding whether it represents a sale or gift, PROVIDED that there is no attempt to commit a fraud on anybody. That doesn't seem to be the case here, but creditors (and courts) can and do carefully examine gifts of property between relatives, business associates, etc. for the possibility that the gift (or below fair value sale) has the purpose or effect of "hindering, delaying or defrauding" any creditor or even likely potential creditor of the transferor.

So, don't make gifts where the purpose or the effect is to make life more difficult for a creditor to get at the property; it may come back to haunt both the donor and donee in a fraudulent-transfer lawsuit.

Another factor to consider is that any transfer of real property is very visible to the taxing authorities, and may have immediate or future impacts on the assessment, gift tax liability, or capital gains due upon a future sale. This may or may not constitute good reason not to transfer the property.

Finally, does the loan itself permit any transfer of ownership? Many loans have "due on sale" clauses that can trigger a demand for immediate payoff. I'd discuss this with the lender first. If the loan is current the lender may agree to waive any anti-sale language, but get it in writing. The lender will probably charge a small fee for the waiver.