Can a quit claim deed protect an asset from a co-owner creditors?
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Can a quit claim deed protect an asset from a co-owner creditors?
I needed my daughter’s income to buy a house 4 years ago, so her name is on the title and mortgage. Recently her driver’s license was suspended but she continues to drive. If I do a quick claim deed and take her name off the title, can my house be taken away in a lawsuit if she has a major auto accident while driving on a suspended license?
Asked on September 15, 2011 under Bankruptcy Law, California
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If your daughter is driving an automobile on a suspended license in violation of any court order or California Department of Motor Vehicle decision and she has no automobile insurance in place as to herself personally or her vehicle, she runs the risk that if she gets in an automobile accident which is her fault that there will be a lawsuit resulting from it and a judgment against her.
If that happens, then the judgment credior can record an abstract of judgment on all real property that she owns creating a lien for payment.
If your daughter has no legal actions pending aganst her, she can sign a quit claim of the property that she has title to that you live in to yourself where the property would not be an asset subject to an abstract of judgment and a resulting lien.
I caution you on doing this in that the quit claim that you write about may trigger a gift tax obligation owed by your daughter depending upon the amount iof equity in the home presently and trigger the due on sales clause of the mortgage (trust deed) securing the loan for the property's purchase.
I suggest that you consult with a real estate attorney about your situation.
Good luck.
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