I am renting my home to my daughter in Sonoma county. The note is an adjustable loan (adjusts once a year) the value of the property is at about 115% of the note.It would need a bit more to have enough for refi. I would like to sell it to her for the note without refinance for now. I am planning to add her to the deed at this time to begin with. Is there a legal way to sell her the property at this point without her name on the mortgage, then she can refi when the loan to value is acceptable for the refinance. That would most likely be in a year or two.
The loan is not assumable, but she is hoping to reap the benefits of ownership
2 Answers from Attorneys
You can sell to her, but don't be surprised if you trigger the "due on sale" clause in the deed of trust.
I wish I had a dollar for every time someone asks one of these questions about giving ownership of real property to their kids.
Do NOT put her on title without receiving market value compensation for the transaction or you will trigger ALL KINDS of actual and potential nasty tax consequences. You can't "add her to the deed." A deed is a document that can't be changed once it is recorded. What you really mean is you plan to convey some portion of ownership to her. If she does not pay you full market value for whatever you give her, you are making a gift of real property and doing that without it passing by will or trust has terrible tax consequences for both of you.
And that is on top of the fact that granting ownership or partial ownership to her, as Mr. Roach mentions, will allow your current lender to demand immediate payment in full of the entire loan balance.
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