Business & Finance Personal Finance

Can You Do a Quit Claim Deed If You Owe Money on a Mortgage?

    Property Conveyance

    • A quit claim deed is a valid legal conveyance of your property, regardless of whether a mortgage loan remains outstanding on the property. If you properly execute and record a quit claim deed, you will transfer your title to the property to the grantee identified in the deed. However, even though the conveyance is proper, you could still face legal trouble because of the outstanding mortgage.

    Mortgage Lien

    • A mortgage loan creates a lien on your property in favor of your mortgage lender. The lien remains attached to your property until you pay off the full balance owed on the mortgage. The lien remains attached even if you transfer your property title by quit claim deed to another person. The grantee under the quit claim deed receives title subject to the mortgage lien.

    Breach of Contract

    • A mortgage loan is a contract between you and the mortgage lender, which means the terms of a mortgage loan agreement can vary from one agreement to the next. In general, most mortgage loan documents require the borrower to remain the owner of the collateral property until he fully pays off the mortgage. Additionally, the loan documents typically state that if the borrower transfers title before paying off the mortgage loan, the mortgage lender can accelerate the balance due on the loan, requiring payment in full immediately. You essentially breach this contract provision, called a due on sale clause, if you quit claim deed your property without the mortgage lender's prior approval.

    Foreclosure

    • Violation of the due on sale clause triggers the mortgage lender's right to foreclose on the property. The lender will have the right to foreclose even though you are no longer the owner of the property and continue making timely mortgage payments. The lender will foreclose, causing the property to be sell to a new owner pursuant to a trustee's deed or a sheriff's deed after the foreclosure sale. So the grantee named in your quit claim deed will not remain the property owner for very long.

SHARE
RELATED POSTS on "Business & Finance"
Can I Fund an IRA if I Have a 403b?
Can I Fund an IRA if I Have a 403b?
How to Raise a Credit Score in a Shorter Time
How to Raise a Credit Score in a Shorter Time
Can I Withdraw From My Pension Plan If I Leave the Company?
Can I Withdraw From My Pension Plan If I Leave the Company?
How to Describe the Curve of Exponential Growth
How to Describe the Curve of Exponential Growth
Government Assistance Pell Grants
Government Assistance Pell Grants
Optometry Scholarships & Grants
Optometry Scholarships & Grants
How to Invest in a Microloan
How to Invest in a Microloan
Most Affordable Place to Live & Retire in the U.S.
Most Affordable Place to Live & Retire in the U.S.
Facts About IRA Saving Accounts
Facts About IRA Saving Accounts
Can You Increase Social Security Benefits by Working After Collecting Social Security?
Can You Increase Social Security Benefits by Working After Collecting Social Security?
The Only Way To Trade Exponential Moving Average
The Only Way To Trade Exponential Moving Average
How to Fix a Bad Credit File
How to Fix a Bad Credit File
Can You Withdraw Funds From a Traditional IRA to Pay Your College Tuition?
Can You Withdraw Funds From a Traditional IRA to Pay Your College Tuition?
How to Open a Free Secured Bank Account Online
How to Open a Free Secured Bank Account Online
Government Grants for Home Improvement for Low Income People
Government Grants for Home Improvement for Low Income People
Does Checking Your Credit Report Lower Your Score?
Does Checking Your Credit Report Lower Your Score?
Legal Consumer Credit Counseling
Legal Consumer Credit Counseling
Reverse Repurchase Agreement Definition
Reverse Repurchase Agreement Definition
How to Calculate Equity Dilution
How to Calculate Equity Dilution
What Effects My Credit Score?
What Effects My Credit Score?

Leave Your Reply

*