Legal Question in Real Estate Law in California

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?

Asked on 8/29/13, 5:14 pm

3 Answers from Attorneys

William Christian Rodi Pollock

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.

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Answered on 8/29/13, 5:26 pm

Anthony Roach Law Office of Anthony A. Roach

It can if the creditors can prove that the transfer to the son was a fraudulent transfer to avoid the creditor.

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Answered on 8/29/13, 5:47 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

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, 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.

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Answered on 8/31/13, 12:50 pm

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