How can I transfer an existing loan on my house to my child who has been paying the house payment for over 2 years?

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How can I transfer an existing loan on my house to my child who has been paying the house payment for over 2 years?

Asked on November 21, 2015 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

You can't transfer the loan if the loan documents say that it cannot be assigned (or cannot be be assigned without the lender's approval or consent--and the lender does not consent). That is because it is perfectly legal for loan to state that it cannot be assigned, or transfered, to another person, and such a provision or term in the loan agreement is enforceable. 
Almost all commercial loans will have a provision like this--read the loan documents to check--and if so, then you cannot transfer the existing loan to your child.
If the loan documents lack such a provision (which is more common with private loans), however, then you can assign or transfer it. Your child can take assignment of (take over) the loan and all obligations thereunder for, say "$1 and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged" via a written "assignment and assumption of loan." If you can assign the loan, you are advised to have an attorney draft the documentation for it.


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