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| CRE Online > Real Estate Law > Bill Bronchick > Question and Answer |
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Question by Pamela:
I live in the state of Missouri, but this is really a general question. If I were to quit claim my interest in a property, and the party I deeded that property to did not keep up on the payments, can I "repossess" or force a sale on that property? I have seen so many people asking this question on legal message boards and never getting an answer that I thought I would give you a try. I realize you have to give general answers, so I tried to make this question as general as possible. Answer By William Bronchick: This is a very common question and is very often misunderstood. When you "mortgage" a property, you sign a promissory note and you give a mortgage or deed of trust under which you pledge your property as collateral. That mortgage or deed of trust (called a "security instrument") is recorded in the county land records, placing a lien on your property. When you transfer title by deed, the ownership changes, but the lien remains. Furthermore, the liability for the underlying debt (the note) does not change. The common misconception is that transferring title by "quit claim" deed removes your liability for the note. IT DOES NOT! Thus, any default in payments will affect your credit. Furthermore, if the property is foreclosed for non-performance, you could be held personally liable for a deficiency. Another common misconception is that if the party to whom you transferred title defaults, you have recourse against the property. WRONG AGAIN! If that personal does not pay, you are liable, but you do not "magically" get the property back. You can step in and make payments directly to the bank, but you have no ownership and cannot "take" the property back. When transferring title in this fashion, it is wise to take back a small "second" mortgage which will permit you to foreclose against the new owner if he defaults. Disclaimer: The foregoing is not intended to be given as legal, financial or tax advice, but intended for instructional use only. If you require legal, financial or tax advice you should seek the assistance of a qualified professional.
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