House Title Mistakes: Title Transfers Mistakes To Avoid
Did you know that owning a house is one of the biggest assets of the average American? But did you also know that if you lose the title or the home because you made a stupid mistake on the title transfer or how you wrote the title when you bought the house or when you refinance, it could be also the biggest loss of your life? So in this video, I’m going to talk about some of the caution you should take when you transfer a title. I’m going to give you real-life examples of when you transfer a title or when you do a quick claim deed. So let’s talk about some titles before I talk about the caution.
How do you hold the title? Well, I’m in California, so if you’re married, I’m just going to give you general information. If you’re married and you buy a house, you can hold the title as community property between wife and husband. Or you can buy a house as a joint tenancy. You can buy a house as tenants in common. You can buy it as an LLC or an S corporation. And there are other ways to hold title. There are also ways to show how much ownership you have. So let’s say I buy a house with my brother and I’m putting 60% down, and I could claim that I own the house 60% and he can own 40%. So there’s a lot of ways to do it.
So the caution is the number one caution is when you buy a house when you refinance, or when you transfer title to your house using a quick claim deed or recording it with this county that you belong to. Consult an accountant, consult an attorney. Don’t just buy a house. I’ve been selling homes for years and years, and one of the forms that escrow because in California we use an escrow company. I know in some states you use closing attorneys, so they send a form to us showing how you want to hold the title. Most people just sign it off. They call me up or call their agents and say, how should I hold title? And we always recommend, talk to your accountant, talk to your professional, because it is very, very important how you hold title. Do you want to hold it as a single person, as a joint tenancy, tenancy in common, who owns how much on the percentage, et cetera, et cetera? I won’t talk about details on the title, but I wanted to give you the information that there are a lot of ways you can hold title.
The other thing is, how do you transfer title? Well, I did a video a couple of years ago, and I’ll have a link at the end of this video on how to transfer title using a quick claim deed. That’s one way to transfer a title, but the disadvantages, there are many. One of the disadvantages is that you may lose tax consequences when you transfer. Do you have a loan on it? Do you have a lien on it? So when you do a quick claim deed, all the liens on the property stay on the property, does not go away. If you have a mortgage on it and you quit claim to somebody, let’s say I have a house and I have a mortgage on my name, and I quit claim the deed to somebody in my family. Well, they may own the house, but I have the mortgage. So there’s some consequences of not transferring the title correctly. But what I want to talk about today in this video, give you three examples, is how to be cautious when you transfer title or hold title. Let’s talk about this example. That’s the best way to show you the dangers of how you hold title or how not to hold title when you transfer title after you have owned the house for several years or after you had to refinance or you’re going through a divorce.
I just got an email a couple of weeks ago. He watched one of my videos on title, by the way, and he said, what can I do? Here’s the scenario. This gentleman was going through a divorce, his second divorce. So to save his house, whatever reason, I don’t know if he consulted an attorney or not, he transferred the house to his dad. The house is paid off. He’s going through a divorce. He transfers the title to his dad. Long story short, maybe after a few months or after a year, I’m not sure of the timing. The dad evicted the son. Yes, the dad evicted the son because now the house belongs to the dad. Maybe they did not have a good relationship. Maybe Something happened, I don’t know. But the gentleman who owned the house quit savings to his dad while he was getting divorced. So his soon-to-be ex-wife does not get the house now, lost the house 100% of the asset, which he paid for 25 years or maybe longer. All that wealth that he accumulated, the tax write-offs, the payments that he made, are gone, just like that. So that’s why you should consult an attorney before you do anything. And don’t just quit claim to anybody, not even to your family, because you have to be 100% sure what’s going to happen. And if you do that, have other precautions, other things in line so that such a scenario does not happen. Long story short, this gentleman is without a house and now probably without a wife.
The second scenario I want to talk about is I just got another email because they watched my video. He just emailed to me about three weeks ago saying that, hey, I need some help. I bought a house. Five months ago, he bought the house. He had a girlfriend. So to make the girlfriend feel good, whatever the reason, he put the girlfriend on title as well. He put all the down payment, he has been paying all the mortgage. But guess what? The girlfriend just left him for good. But he said, what happens to the girlfriend’s name on the title of the house? Well, legally speaking, she owned part of that house, possibly 50 50. That’s something to be dealt with in court as far as how much she owns the house, but legally, she has a stake in the house. This nice guy who had a girlfriend wanted to make her feel better, put her on title, and now he’s losing the house or portion of his house. I’ll give you another example.
About 20 years ago, when I was newer in the business, not new, but pretty much newer in the business, I sold a house to this young couple. They were very excited. They found me through a sign call that I had on listing on. They called me and said, Mike, we like this house. We want to buy it. I called them to my office, chatted with them, and found out that they were just about to get married, but they were not married yet. I told them is make sure you talk to an attorney. How you want to hold title. Well, we open escrow. When the time came to sign those documents, remember I talked about the document where you have to sign, and how you want to hold title. They called me up and said, Mike, we just want to own it 50-50. We’re still not married, et cetera, et cetera. Or maybe they got married, I don’t remember. But anyway, so they were not married, actually. So they bought the house. And then two years later, they called me again and say, Mike, we have a problem. We want to sell our house. They were not married. Still not married. They were getting divorced. The girl had put all the down payments. She had made all the payments. The guy was going through college or schooling. He never worked. And now they’re going through a divorce. The guy who is getting divorced now possibly owns 50% of the home in California. I don’t know the legality, but long story short, the lady probably going to end up losing or lost half the house or at least 40 50% of the house.
So these things do happen. You have to be careful how you hold title, and consult an attorney. I said over and over again, consult an attorney, consult your parents, consult a professional. How to hold title because when you transfer title, especially when you’re using a quick claim deed and it’s not a sale, but you’re just transferring the title, and usually you transfer title using quick claim deed for people within your circle or somebody. No, you never quit title of your property to a stranger or you don’t know who they are, because usually when you have a quick claim deed, there’s no transfer of money because it’s not a sale. So. Caution, caution, caution. Please watch this video on how to transfer title using a quick claim deed. Thanks for watching.