Quit Claiming Property - What it DOES and DOES NOT do

[Pandora]

I thought a thread on quit claiming would be a good idea as I've seen SO many people believing that a Quit Claim removes them from responsibility of a property and that they're in the clear.

It doesnt work that way unfortunately.

Quit Claiming simply means that your interest in the property is removed however your financial obligation remains UNLESS or UNTIL the person you quit claimed to gets the property refinanced in their name alone.

Please please please make sure you know how it works before you do it - then end up finding out its not what you thought it was. Many people have been burned by doing just this very thing - and when it comes to BK - quit claiming can cause your case to be discharged and/or even fraudulent.

The best site I could find that can answer questions about Quit Claiming is here:

http://www.mortgagefit.com/search/quitclaim-deed.html

I hope this helps anyone considering doing a QC or that has done it, thinking they've removed themselves from the note. I had a family member that found out the hard way - and it was a nightmare, would hate for that to happen to others.

[justbroke]

Even worse, in the majority of courts of equity, you can't QC a property to just anyone. There must be consideration and the person you QC the property to, must want it. Many people think that they can just QC their property to their lender in order to fashion a "self-help" reverse foreclosure. Just doesn't work that way. Some lenders will accept a deed-in-lieu of foreclosure which is like a quit claim.

The problem with a QC is that it is not a warranty deed and there is no title insurance. The person receiving the deed could have all sorts of issues with an encumbered property. For example, if you QC the home to your first lender, what about the 2nd mortgage? The home is still encumbered. The only way to get a good clean title when there are multiple lienholders is to either pay them all off, or to foreclose.

[Pandora]

thanks for adding that JB - the more people know what a QC does and does not do - the better off they'll be.

[SunshineGal]

In Florida you will pay fees based off the amount of consideration, and although the word must be included within the deed, it's common to see $10.00 instead of the purchase price. When it's a family transfer you may even see "love and affection" instead of a dollar amount.

Another thing to watch for...many lenders include a "due on sale" clause in the mortgage, so if you convey the property (even via Quit Claim) it gives them cause to call the note due.

[Poorhouse64]

Quit Claim title back to the bank on a non-reaffirmed house post-discharge..... is this possible/permissable? The bank has not even begun the foreclosure process and with all the foreclosure moratoriums nationwide, it looks like it will be YEARS before the bank forecloses and takes back title. Since the banks have mostly lost or screwed up their own paperwork, would they even notice if a Quit Claim had been filed and that they are now on the title?

What would happen if we filed Quit Claim paperwork with the County and just gave the title back to the bank?

[justbroke]

Quit Claim title back to the bank on a non-reaffirmed house post-discharge..... is this possible/permissable?

As I wrote above, this doesn't work in most jurisdictions, because a QC requires consideration, which means moth parties must agree to the terms.

The correct process to "QC" a property back to a lienholder, is to use the deed-in-lieu-of-foreclosure process. Otherwise, the lender could be stuck with junior liens and other junk encumbering the property. This is why most lenders prefer foreclosure. A foreclosure gets you clean title!

This has been discussed on this forum before, ad naseum.

[Poorhouse64]

We've been trying to get the bank to do a deed-in-lieu for several months. Nothing. No response. No notice of default (it's been 13 months), no notice of foreclosure, no nothing. If I wasn't 500 miles away from that vacant house, I'd rent it out. I just want to be rid of it now. A deed-in-lieu would have been the best way to go, but the bank refuses to cooperate as always......

[Poorhouse64]

We've been trying to get the bank to do a deed-in-lieu for several months. Nothing. No response. No notice of default (it's been 13 months), no notice of foreclosure, no nothing. If I wasn't 500 miles away from that vacant house, I'd rent it out. I just want to be rid of it now. A deed-in-lieu would have been the best way to go, but the bank refuses to cooperate as always......

Well....who knew?......according to the County's website, the bank filed a NOD a month ago.

[justbroke]

Those sneaky...

[debee]

Suppose you weren't trying to avoid foreclosure though, suppose you don't care about that aspect much at all, but you just wanted to get your name of the county records.

If you're post-bk and you've listed the property, you're already off the mortgage.

I know there was an old Nolo book (2002?) that described the process - quitclaim the deed back to the lender, get it notarized, pay the transfer tax and recording fees and get it recorded. It won't stop foreclosure, but when the grass is 3 feet tall, not your problem. Taxes? Not your problem. Insurance? Not your problem.

I know you said this was discussed to death, but when I searched, I couldn't find anything. So my apologies if this particular scenario has been covered.

[Pandora]

Suppose you weren't trying to avoid foreclosure though, suppose you don't care about that aspect much at all, but you just wanted to get your name of the county records.

If you're post-bk and you've listed the property, you're already off the mortgage.

I know there was an old Nolo book (2002?) that described the process - quitclaim the deed back to the lender, get it notarized, pay the transfer tax and recording fees and get it recorded. It won't stop foreclosure, but when the grass is 3 feet tall, not your problem. Taxes? Not your problem. Insurance? Not your problem.

I know you said this was discussed to death, but when I searched, I couldn't find anything. So my apologies if this particular scenario has been covered.

If you're "off the mortgage" as you claim - then there is no reason to try to remove your name. Title has transferred. I think maybe you're confusing your personal responsibility to the note with actual ownership. Until your name is off the deed, you are legally still the owner.

It sounds like a DIL is what you're referring to. Quit claiming doesnt avoid foreclosure either - it only removes your personal interest in a property, you are still liable for the mortgage note regardless unless and until the person you quit claimed to refinances in their name alone. If they default with your name still being on the note, it goes against you as they have no legal responsibility to the note.

[justbroke]

If you're post-bk and you've listed the property, you're already off the mortgage.

How are you "off" the mortgage? A bankruptcy discharge does not remove or even affect the security instrument, which is the mortgage.

I know there was an old Nolo book (2002?) that described the process - quitclaim the deed back to the lender, get it notarized, pay the transfer tax and recording fees and get it recorded. It won't stop foreclosure, but when the grass is 3 feet tall, not your problem. Taxes? Not your problem. Insurance? Not your problem.

It was speculative, because a Quit Claim in most jurisdictions not only requires the want of both parties to enter into the agreement but that the deed is actually transferred. Whether it will work or not, is interesting. I haven't heard any cases where it was successful. The bank or someone else could just QC it right back to you OR have it declared void (null).

I know you said this was discussed to death, but when I searched, I couldn't find anything. So my apologies if this particular scenario has been covered.

It was probably only one thread, but it was a long thread.

[debee]

When I said "off the mortgage", I meant that since the bk filing the bank has no recourse other than to take the property. I mentioned that to distinguish between those people who think of quit claim as a way to remove their legal obligation to make payments or be held accountable for deficiencies.

The scenario I meant to describe was one where the debtor has surrendered the property in bankruptcy, and is waiting waiting waiting for the lender to foreclose and wants to end the responsibility and expense for taxes, maintenance, and insurance on the empty property.

I was not suggesting quitclaiming it to a person but to the lienholder. This was the process described in the old Nolo book.

Someone on this forum was posting recently about how their lender wouldn't do a DIL or foreclose and the expense and stress of worrying over the vacant property went on for months.

I haven't heard any cases successful or otherwise.

[debee]

I did some more digging and found this thread on quit claiming a property back to the lender. Someone on the thread did it and it worked (within the parameters I described). According to that person, if the lender were to QC it back to him, they would be relinquishing their claim to title in the process so that wouldn't be likely to happen.

I wouldn't try it as a remedy against the mortgage note responsibility, or in attempt to bypass foreclosure, but if a person is desperate to get their name off the county records for the reason I described earlier, it may be a good idea. When my time comes, I'll try it and report back.

Meantime, here is the thread:

http://www.bkforum.com/showthread.php?48282-How-Do-I-get-The-Bank-To-Take-Back&highlight=quit+claim

[justbroke]

It's because you can't quitclaim to someone who doesn't, at the time, want it. That makes the "QC" null and void. Now, there was discussion on this in the past, and I think the members were banned so their posts are gone. It involved QC'ing property back to a bank that won't foreclose.

There is nothing in the law requiring a lienholder to foreclose. It's only their right, not their "duty". I just don't suggest anyone try QC'ing property back to a bank, just because they aren't paying on the debt or they have discharged their responsibility for repaying the debt back to the bank. The debtor would still own the home and is responsible as a liable person for the upkeep, maintenance, insurance and events that happen upon the property.

If this QC thing was so magic... everyone would be doing it... and they are not. You also need to surrender the deed to the new person/entity and they must accept it.

I'm still waiting for someone to actually do this and succeed. Any bank/lienholder would be STUPID to allow it to happen, because they'd have a cloudy title and too many issues. That's why foreclosure is nice because it gives clean title.

(Adding that there was nothing in that thread which said that it "worked". Only that a person could actually "file" one, but the problem is that it's not a valid QC without "want")