I want to transfer my property to a family member. We know all of the land characteristics and don’t need to run a title check. Can I legally quitclaim deed my home to another person while I’m still paying off my mortgage?
What is a Quitclaim?
A quitclaim deed can transfer “rights and interests” to another party quickly. You can use it when you know all of a property’s characteristics and don’t want to waste money on a title check. The seller (grantor) transfers his interests to the buyer (grantee).
If the buyer and seller are brothers and want to transfer property without paying unnecessary fees, they can use a quitclaim deed. This is a fast and easy method for property conveyance.
Assets not Liabilities
A quitclaim will transfer your home equity to the other party, but not your mortgage. The quitclaim deed transfers assets, not liabilities. Therefore, you better know what you are doing.
Besides the home equity, what rights are you transferring? You are transferring the right to use the property while timely mortgage payments continue to be made.
Bank Foreclosure Rights
The bank holds your mortgage. If you miss a payment, it can claim the entire property through foreclosure. Most banks do not allow you to quitclaim deed a property with a mortgage on it. Why?
The financial lender made the loan to you, not the other party. Therefore, they have no real financial relationship with the other party. They have rights over you, not the other party.
Most quitclaim deeds are completed to save money and expedite ownership rights. The homeowner needs money quickly and only has a mortgage on a house to offer in exchange. Unfortunately, that might not satisfy the bank.
Getting Bank Permission
The bank might foreclose on your house if you don’t get their permission to quitclaim the property. Ideally, the grantee should refinance the house, so he would establish a legal relationship with the bank.
But, if you can get the bank to agree to the grantee making payments on the present mortgage, you might be able to complete the quitclaim deed. All in all, the bank simply wants their money. They have plenty of legal justification to foreclose if one payment is missed.
You can try a quitclaim deed when you are still paying your mortgage, but you should probably ask permission of the bank. Prove that the grantee will still make payments and that it is in the lender’s best interests to accept the quitclaim deed. But, remember that you still have the mortgage liability, even after you complete the quitclaim deed.
Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!