Q: From Glendale AZ. Quit Claim a home to a non-family member.
From Glendale AZ. My son passed, single, with no will, and no children but a live-in girlfriend. All his belongings, including the home, go to his father and me. He made a dying declaration that he wanted the house to go to his girlfriend. We would like to honor that wish. It is my understanding that the home can be quit claimed to his father and me. Can we then quit claim it to his girlfriend, or does she then have to qualify for a new loan?
A:
A quit claim deed passes title to property to the grantee of the deed. There is no “loan” required. Title passes subject to all existing liens, assessments, and encumbrances.
If your son is the borrower on a loan which is secured by a mortgage or deed of trust giving his creditor a security interest in the property, your son’s estate remains responsible to repay the loan (subject to any applicable exemptions) and the property continues to serve as collateral for that loan until it is repaid despite the quit claim deeds.
Your son’s loan agreement may or may not require it to be repaid in full by his estate upon his death depending on the language of the loan agreement. If it does not, as long as the loan is paid according to its terms, the creditor cannot take action against the collateral.
That means neither you nor the girlfriend personally have any obligation to repay the loan but, as long as someone does, the creditor cannot “foreclose” on its security interest.
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