Can i transfer my house back to my parents, whom i bought it from 2 years ago, and how do i go about it.

Question

Can i transfer my house back to my parents, whom i bought it from 2 years ago, and how do i go about it.

Answer 1

Yes, you can.  Most people go about this transaction with a Quit Claim deed, or some sort of equivalent in your state of residence.

HOWEVER...if the loan on the property is in your name, you need to check your Trust Deed (or Mortgage, if that's what you have) for something called the "Alienation Clause".  The Alienation Clause, for all practical purposes, says that if you alienate from the title on the home, i.e. sell or give away any portion of interest in the home, then the lender can call the loan due and payable within 30 days.

Look for a piece of paper in all of that paperwork you signed at the title company called the Trust Deed.  Right up at the top, it will say Trust Deed, or Deed of Trust, or maybe even just Deed.  Some lenders, but not many, use what's called a "Mortgage" instead of a Trust Deed.  This Mortgage referers not to the loan on the home, but to the fact that you give the lender permission to take the home from you if you don't make timely payments as agreed in your Promissory Note.  

Anyway, once you find your Trust Deed (or Mortgage), then find the Alienation Clause.  It's there, believe me.  I don't even need to see it.  It's there.  If you Quit Claim all or any part of your home to your parents, and there is a loan on the home from a bank or credit union, then you have just activated the Alienation Clause.

Two quick thoughts about that:

1) It's not illegal to activate the Alienation Clause.  It just allows the lender to accelerate your loan repayment, as mentioned above, if it so chooses.  So, although it's perfectly legal to activate the Alienation Clause, it can certainly become a huge financial headache for you, possibly even involving foreclosure on the property.

2) Your lender may never find out about it, or even care.  It depends on the lender.  Many lenders don't pay much attention to this type of issue so long as the monthly payments keep coming in on time.  But remember that YOUR NAME IS STILL ON THE LOAN, even though your parents' names will be on title.  So make sure your parents send those payments on time every month.

If I were you, looking at this decision, I would call a real estate attorney, or if I lacked the funds to do that, I would call a title company and ask them to show me an Alienation Clause, as well as explain what it would mean to me if I Quit Claimed a property to someone else, while keeping the existing loan intact.

Good luck with this.  Tread carefully.  You're on very thin ice if you decide to do this.

In fact, although I cannot act as an agent for you in this matter, I would certainly be happy to direct you to someone who could help you in your state.  Just e-mail me if you feel that you need this sort of help.