Legal Question in Real Estate Law in Michigan

The answers are yes and yes. Yes your daughter and son-in-law would qualify for the homestead exemption, and yes the transfer would trigger the "due on transfer" clause of your mortgage. It is unlikely that your lender would "call" the loan due as long as you are making payments, but it is a possibility. The other issue you have is control. Once you add their names to the deed, you lose total control. For example, if your daughter and son-in-law were to get divorced, he could make a claim for part of the property. If you wanted to sell the property, you couldn't do it without their permission. If you have a comfort level with the idea that the bank will not call the loan, I suggest a land contract sale. This allows you to "take back" the property if they stop making payments (for example, divorce, etc.). It also allows them to qualify for the homestead exemption.

One more suggestion: Have a lawyer draw up the papers and work through the entire scenario with you. It gets tricky because you must insure the property in the right way to cover your lender and also cover the new owners, while also keeping your interest insured. You may also consider selling the home to your daughter only. Then, in the event of maritial problems, he is a tenant and can be evicted, which is alot shorter process than a land contract forfeiture.

Sorry to be so cynical, I've seen lots of family real estate deals go south fast, even where the family had great intentions. Let me know if I can help.

Glenn

Glenn R. Matecun

Attorney At Law

Toll free (888) 487-6150

www.MichiganEstatePlans.com