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Help, my renter wants me to quitclaim my house to her???

Posted on: 16th Nov, 2006 08:38 am
i currently have a lease-purchase aggreement for my rental property. the renter\'s have come to me with the following request. they want me to quitclaim my interest in teh property to them, have them refinance in their name, then provide me my funds. if for some reason they do not get the refinanced mortgage, then they would quitclaim the property back to me.

the selling price is $185,000 and i have serious problems with quitclaiming my interests to a potential party. will i loose my rights if i sign this quitclaim (it states that i would) and is it legal what the renters are trying to do??? thier motgage lawyer said that this process is common, but i have stated that i will not sign a quitclaim until i have $185,000
Hi,

I do not think it will be wise to quit claim the house before the lease period is over, as you can not be certain that they would be able to get the refinance.

You are not aware of their credit rating and it might be possible that lenders refuse to refinance.
Posted on: 16th Nov, 2006 09:43 am
"]Will I loose my rights if I sign this quitclaim (it states that I would)"
Yes if you sign the quit claim deed then you will loose your rights over the property.
"and is it legal what the renters are trying to do???"
Also, if you and the renter mutually agree to the quit claim of ownership then it can be done and would be legal.
Posted on: 16th Nov, 2006 09:49 am
Their credit is unhealthy, that is why thier mortgage person claims that they must do teh refi after i quitclaim the property to her. The mortgage company says that they cannot qualify for a contemporary mortgage due to their score...

The lawyer for the mortgage comapny claims that they do this all the time, I have just never heard of it. A close friend in the real estate business says not to quitclaim anything until the cash is in my hand... This makes sense to me, if a quitclaim gives up my rights, but not my liabilities for paying my mortgage on it...

Any helpful comments would be greatly appreciated...
Posted on: 16th Nov, 2006 09:53 am
Hi Jagilber,
'but I have stated that I will not sign a quitclaim until I have $185,000"
I agree with you that it will not be suitable for you to quit claim the property before getting the $185,000.
"This makes sense to me, if a quitclaim gives up my rights, but not my liabilities for paying my mortgage on it..."
That's quite true, even after quit claiming the property you will still be liable for the mortgage payments until it gets refinanced in their name.

In my opinion it is not ok to give up your ownership until you have the money.

Thanks
Colin
Posted on: 16th Nov, 2006 10:02 am
I would say that if they do get a lender who will agree to refinance the mortgage and they show you proof that they do have a lender willing to refinance then only it will be appropriate for you quit claim the property otherwise not.
Posted on: 16th Nov, 2006 10:16 am
Hi Jagilber,

I don't think you should quit claim your property right now. It will give them the ownership rights on the property before they even try to buy your house. And, then if they don't pay you the price, you will be at a loss. Moreover, if they do not get a refinance loan, there remains the uncertainty as to whether they will at all quit claim the property back to you.

I have come across people falling into such traps, so I shall suggest that you avoid doing a quit claim deed now. It's better that you give them some more time in case they cannot arrange for the $185,000 right now.

Thanks
Posted on: 16th Nov, 2006 10:26 pm
Thanks to all for some very good advice...

I have talked to them, and let them know that I will not Quitclaim the house over to them, until I have the $185,000...

Here is what my renters and their morrtgage person said they wanted to do...
1. Quitclaim my tenant "on to" my deed.
2. wait 5 days for the deed to be recorded.
3. have them refinance the property in their name.
4. then I quitclaim completely off after I get the $185,000 from the refi.
5. In the event of refi reject, she quitclaims her name off the deed.

This sounds like it would work, however, I am VERY NERVOUS about doing this!!! I said I would consider (not guarentee, just consider) this if they :
1. provided me a copy of the quitclaim they want to use to get her joint with me on the deed.
2. sign a notarized document stating that she could not quitclaim her interests in the property to anyone else. This document would also state that at the end of 30 days, if she could not get financing, she would have to quitclaim back to me. (Can I even get a document like this???, will it hold up in court?)
3. provide me proof from her mortgage company that they will refinance her.

What do y'all think???
Will I have any rights from step number 2 above (the signed document)???
Could she quitclaim her interests to her husband even though she signs the document?
Should I also include that I get an attorney to look over things, protect my interests and they pay for it?
My question is, how can they do a refinance if they do not have a mortgage now?, or does a refi simply require them to be on the deed?
How can I trust what the mortgage company gives me? When we signed the lease/purchase in January, she provided a document that claimed she qualified for the house, but she has chosen to go with another mortgage company, thus the document I have is not any good...

Thanks again for all of your thoughts/ideas. And remember, I GREATLY appreciate ALL of your responses.... THANKS
Posted on: 17th Nov, 2006 04:13 am
No, it is not a good idea to quit claim deed to your renters. You would loose your rights and still be obligated for the mortgage, if there is still a mortgage on the house.

Some ideas for you would be; Write up a rent with option to buy contract. 'X' amount of dollars applied to the down payment each month, which you hold in 'escrow'. Possilby satisfying the required down payment from the bank for their financing.

Possibly, if they have rented from you for some time now, say maybe over a year...you man be able to 'see' that $200.00 a month already may be in that account. At this time possibly there is $2400.00 that you can 'show' on paper, per your agreement from a year ago. They go to the bank/mortgage company and apply for the mortgage stating they have $2,400.00 towards the down payment per agreement plus whatever they have in the bank now. Which may be nothing, which is why they want you to 'quit claim' the house to them.

Another option; Hold the note yourself. If you like the monthly income, and can do without the lump sum of $185k. Go to your title company for a seller's contract or real estate lawyer who will give you the best way to write this up professionally.

Another option; Raise the price of the home to fit their 'down payment' needs. They have to get prequalified first so you know how much to raise the price by. This is called a 'Non-ARMS length' Transaction, since you are giving them a 'gift of equity', so to speak. Bottom line: YOU want $185k, mortgage company says they need 10% down, raise the price to $203,500.00 with 'gifting' equity to them for $18,500.00. The home will need to appraise for $203,500.00. The mortgage loan professional should know how to structure this. You will still get $185k.

No quit claim deed. It sounds like their watching too much late night TV with buy a home with No Credit and No Money...

If you want to sell and they want to buy, then possibly these options will work for you!

Good Luck!
Posted on: 17th Nov, 2006 11:28 am
My God DO NOT DO THIS.

This is REAL PROPERTY. it sounds like a SCAM.

Do it the right way if any.

If your cash strapped you refinance it.
Posted on: 17th Nov, 2006 12:07 pm
Hi,
"Another option; Raise the price of the home to fit their 'down payment' needs. They have to get prequalified first so you know how much to raise the price by. This is called a 'Non-ARMS length' Transaction, since you are giving them a 'gift of equity', so to speak. Bottom line: YOU want $185k, mortgage company says they need 10% down, raise the price to $203,500.00 with 'gifting' equity to them for $18,500.00. The home will need to appraise for $203,500.00. The mortgage loan professional should know how to structure this. You will still get $185k."
No arms length transaction is an option when the transaction involves relatives and in Jagilber's situation it is not so.

I also would not favor such a transaction with people I do not know.
L. Sonnenberg
Posted on: 17th Nov, 2006 02:53 pm
In my experience with a major lender for 3 years, I closed several loans where the 'landlord' and renter situation existed. The reason it is a 'non-arms' length transaction is there is no 'Realtor' involved in the transaction. So the 'arms length' is 'non' due to there not being an outside party to the transaction, other than the lender.

Thank you for your .10 of input.

Good Luck!
Posted on: 17th Nov, 2006 03:03 pm
Hi,
"2. sign a notarized document stating that she could not quitclaim her interests in the property to anyone else. This document would also state that at the end of 30 days, if she could not get financing, she would have to quitclaim back to me. (Can I even get a document like this???, will it hold up in court?)"

"What do y'all think???
Will I have any rights from step number 2 above (the signed document)???"
An real estate attorney will be able to provide you details on whether such a notarized document can be made out and also if it would be legally binding on the renter or not. As then the state laws will come into the consideration and state laws do vary from one state to other.
"How can I trust what the mortgage company gives me? When we signed the lease/purchase in January, she provided a document that claimed she qualified for the house, but she has chosen to go with another mortgage company, thus the document I have is not any good..."
You should ask her why she is not going with the lender she previously said has qualified her. Then there will not be so many complications as they are trying to create right now.

What I would suggest, if you are not in a hurry to sell the house then wait for the lease period to be over. In the mean time they can also try and improve their credit score and then they would be able to easily qualify for any type of loan.

Thanks
Blue
Posted on: 17th Nov, 2006 03:33 pm
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