Scenario: Husband and wife divorced about a year ago. Eight months ago both spouses quit claimed the property to their son's name, however both spouses are still obligated to make the mortgage payment and are on the note. Now one of the spouses finds themselves in a situation of insolvency. Can the creditors still attach liens on the property?
3 Answers from Attorneys
What creditors? If you are talking about the holder of the mortgage, the answer is yes, they can proceed against the house. The deeds do not extinguish the mortgage.
It can if the creditors can prove that the transfer to the son was a fraudulent transfer to avoid the creditor.
Are these answers clear? Mr. Christian is pointing out that the mortgage holder is already a lienholder and doesn't have to do anything to "attach liens" to the property, since its lien has already attached........now, the mortgage holder can begin foreclosure proceedings if and when it isn't paid, or possibly, even if the regular monthly payments are kept up, it could foreclose based on a violation of a "due on sale" clause, which would probably have been triggered by the transfer of ownership to the son. Mr. Roach is addressing a different type of creditor; namely, creditors who haven't previously recorded any lien against the property, but who may sue the parents for a fraudulent transfer......see California's version of the Uniform Fraudulent Transfer Act, at Civil Code sections 3439 - 3439.12. It is considered a fraud when a debtor or prospective debtor transfers property and the intent, or even just the effect, of the transfer is to "hinder, defraud or delay" a creditor or prospective creditor of the transferor.
Related Questions & Answers
I rented a home in California to a mother and daughter on a year lease. After a year... Asked 8/29/13, 10:56 am in United States California Real Estate and Real Property
My Mother owns a home in Santa Barbara which she has made her payments on time and... Asked 8/29/13, 8:50 am in United States California Real Estate and Real Property
I am in California. In 2010 due to the economy I was behind in my HOA fees and made... Asked 8/28/13, 8:21 pm in United States California Real Estate and Real Property
We lived on a brand new build loft condo, when we purchase the property #180 parking... Asked 8/28/13, 6:46 pm in United States California Real Estate and Real Property
How can i remove a lien from our home, debt incurred by relative who was on title?... Asked 8/28/13, 1:52 pm in United States California Real Estate and Real Property