Question: My ex-husband and I still own a home in Glendale
together. We want to be able to deed the home to our daughter.
Our daughter cannot qualify for financing, however, so we want
our daughter to be able to pay the mortgage payments to the same
mortgage company that we are paying now. Is this possible? If
so, who can do this for us?
Answer: Most mortgage loans have a “due on sale” clause
which permits the mortgage lender to accelerate the entire mortgage
balance upon a transfer of the home. In certain circumstances,
however, federal law prohibits enforcement by a mortgage lender
of the “due on sale” clause. These circumstances include transfers
to a revocable living trust, transfers by inheritance, and transfers
to a spouse or to children such as your daughter. Therefore, if
you and your ex-husband deed the home to your daughter, your daughter
should be able to continue to pay the same mortgage payments to
your mortgage lender. You should contact a title company to prepare
the transfer documentation. Note: You and your ex-husband are
entitled annually to give $11,000 each to your daughter without
any tax consequences. Therefore, if the equity in the home is
more than $22,000, gift tax returns may need to be filed by you
and your ex-husband. Please contact your accountant for more information.
