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Quitclaim Deed Right After Closing

Technical topics regarding tax preparation.
#1
MWEA  
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A couple, unmarried, buys a house. They intended to purchase as "A" being the sole owner (and also the sole person on the mortgage), but the title company put it as TIC. They find out before closing, but were told it would delay the processing to change it and they could quitclaim the deed on "B"s portion after the closing. They proceed with the TIC title. No money is changing hands between A and B.

Is this a reportable gift?
 

#2
Joan TB  
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If they intended for A to be the sole person on the mortgage - is he?
 

#3
dave829  
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If “A” is the sole borrower on the mortgage, and “B” didn’t put up any money to purchase the house, then “B” didn’t gift anything to “A” by signing a quitclaim deed to transfer “B’s” interest to “A.”
 

#4
Nilodop  
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If “A” is the sole borrower on the mortgage,. I don't see that fact anywhere.
 

#5
MWEA  
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A is the sole person on the mortgage. Wouldn’t B have a legal right to the equity if she chose to not quitclaim the deed?
 

#6
Nilodop  
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Lawyer has to answer that. It was a mistake, right?
 

#7
MWEA  
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It was a mistake by the title company. However, they found out before the closing and proceeded anyway as to not delay the closing. I appreciate everyone’s feedback.
 

#8
Nilodop  
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So do you conclude it is a reportable gift?
 

#9
dave829  
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Nilodop wrote:If “A” is the sole borrower on the mortgage,. I don't see that fact anywhere.

MWEA wrote:They intended to purchase as "A" being the sole owner (and also the sole person on the mortgage)
 

#10
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I've got to ask: If A was the intended purchaser and the sole person on the mortgage, how did the title company come up with B's name?

Especially since the couple is unmarried.
(Edited for specifics.)
 

#11
Dennis2  
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Aside from the principle that gifting requires donative intent, what would be wrong with considering the deed back a disclaimer?
 

#12
keiser  
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B had no actual interest in the property. The initial conveyance was a mistake. The quit claim merely corrected the mistake. There was no "gift", there nothing to "gift."
 

#13
Webster  
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I wonder if there is any written communication substantiating
They find out before closing, but were told it would delay the processing to change it and they could quitclaim the deed on "B"s portion after the closing. They proceed with the TIC title.
It would substantiate intent.

I wouldn't worry whether it is a gift. Notate the file, get any written communication you can, and move on. They were correcting a mistake.
 

#14
Frankly  
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Yellowdog wrote:I've got to ask: If A was the intended purchaser and the sole person on the mortgage, how did the title company come up with B's name?
Especially since the couple is unmarried.

Exactly. Likely that the "couple" decide to buy a house together, proceed on that basis, then decide to change to "A" only and didn't mention their new plan to the RE, escrow, title folks. That was the mistake.
 

#15
MWEA  
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The way it was explained to me is they were initially planning to title it as tenants in common. They changed their mind and relayed it to the title company, but it was not updated. When a mistake was discovered before closing, they were told it would delay the closing which would also increase their mortgage rate with changes being made by Fannie Mae. They opted to close and try to fix it after the fact.

I appreciate everyone’s response. My plan as of now is to tell him to keep documentation of the email chain of what happened and do a quitclaim deed without additional reporting. I appreciate everyone’s comments, this board is a terrific resource. I just hope someday I can give back a portion of all the value I have received here.
Last edited by MWEA on 25-Oct-2020 5:29pm, edited 1 time in total.
 

#16
Joan TB  
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So was the mortgage issued in both their names or just his? Changing title to real estate can initiate some undesired consequences on a mortgage.
 

#17
MWEA  
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Joan TB wrote:So was the mortgage issued in both their names or just his? Changing title to real estate can initiate some undesired consequences on a mortgage.


Just his name.
 

#18
jeffm  
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A quitclaim deed might not be the best route. I can't speak for other states, but in Texas, we don't like them. Consider a Deed without Warranty. A Special Warranty Deed is another alternative, but under the facts presented, it is not necessary. A Special Warranty Deed provides a limited warranty, which is better for a *buyer* than no warranty at all. In your case, the borrower is not buying the property from his girlfriend, so he doesn't need a warranty.

https://www.legalzoom.com/articles/quit ... od%20title.

https://docprepper.com/top-3-reasons-wh ... fer-title/
 

#19
keiser  
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The title company could have and should have already provided the conveyance.
 


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