TRANSFERRING REAL PROPERTY INTO THE TRUST
How do You Transfer Real Property into the Trust?
To transfer real property into your Trust, a new deed reflecting the name of the Trust must be executed, notarized and recorded with the County Recorder in the County where the property is located. Care must be taken that the exact legal description in the existing deed appears on the new deed. If the deed is not executed properly and title of your real estate is not in the name of your Trust on your death, a probate proceeding may be needed to confirm that property to your beneficiaries.
Is there a reassessment of your property under Proposition 13?
There will be no reassessment of your property under Proposition 13 as a result of this transfer. At the time of recording the Transfer Deed, a “Preliminary Change of Ownership Report” must also be filed to prevent reassessment.
Can my lender accelerate the debt?
Federal law prohibits acceleration of any indebtedness by any lending institution or private individual on a transfer of residential real estate into a revocable trust. However, where there is an existing indebtedness on real estate other than residential (e.g., commercial and/or multi-unit), it will be necessary to contact the financial institution holding either the mortgage or deed of trust before placing it in the name of the Trust. The failure to obtain the lender’s consent to the transfer of non-residential property could potentially lead to the lender attempting to accelerate the loan based on a “due-on-sale” clause contained in the note or deed of trust. Typically, such consent will be granted by the lender after it has reviewed the Certificate of Trust and the appropriate assignment documents have been executed.
There can be special problems with the transfer of property held under a land lease; therefore, you should obtain the appropriate advice prior to any such transfer. If you purchased a home under the Cal-Vet program, you should contact the Department of Veterans Affairs for the proper method of transferring your purchase contract to your Trust.
What About Home Insurance?
When your insured property (e.g., your residence) has been re-titled in the name of your Trust, you should notify the insurance company (or agent) of the transfer and ask whether any change in the policy is required. This should apply to both casualty and liability insurance. It may be desirable for the policy to indicate that the Trust is an additional insured. Additionally, if you purchased an owner’s title policy of insurance when you purchased your home, you should notify that insurer of your trust as well and determine whether an endorsement on your policy will be required. If your title insurer indicates no additional paperwork is required, you should get that determination in writing.
What About if I Refinance the property?
Please note that if you should refinance or borrow against your property, the lender or the title company may require that the property be transferred out of your Trust and into your name as an individual (this saves the lender and the title company the task of reading the trust in order to verify that it does not contain any terms or conditions which could interfere with the lender’s security interest). Be sure that you ask the title company to prepare and record a deed transferring the property back into the Trust as soon as the refinancing is complete. If this does not occur, probate of the property may be necessary. In the event the title company will not cooperate, be sure to contact me (or another attorney) so that I can prepare and record the appropriate deed to return the property to your Trust.
Future Purchases of Real Property
As you acquire new property, simply instruct the escrow officer handling the transaction that you wish to have the title recorded in the name of your Trust. You may need to provide the escrow officer or title company with a copy of the Certificate of Trust.
Get a fresh start and call Menifee Bankruptcy Attorney Kris Crawford today (877) 560-9578
Plan ahead and call Menifee
Estate Planning Attorney
Kris Crawford today
MENIFEE, SUN CITY, PERRIS, WILDOMAR,
LAKE ELSINORE, MURRIETA, TEMECULA