Posted on: 12th Dec, 2007 01:46 pm
I own three pieces of rental investment property in FL. I'm currently in the process of trying to do short-sales before they go into foreclosure. Can the creditors come after my primary home in CA? If I quitclaimed the CA house over to my husband, would that protect us?
Thanks!
Thanks!
Hi Stephanie,
Welcome to this forum.
You have taken a good decision. Short sale is far better than DIL or foreclosure. It will have less effect on your credit.
Quitclaim to your husband is not a very good idea. Any transfer of property before one year the short sale or foreclosure is regarded as a fraudulent act.
Thanks,
Larry
Welcome to this forum.
You have taken a good decision. Short sale is far better than DIL or foreclosure. It will have less effect on your credit.
Quitclaim to your husband is not a very good idea. Any transfer of property before one year the short sale or foreclosure is regarded as a fraudulent act.
Thanks,
Larry
Hi Stephanie,
Welcome to our community forums.
You will be doing short sale on the investment property in Florida, so this won't affect your primary home in CA. I mean the loan is against the Florida property, so the creditors/lenders won't come after your CA home. By the way, do they even know that you have a home in CA? If they don't, then you need not worry.
At the most, if the lender can ask for the difference between the mortgage balance and the short sale price and if you are unable to pay it off, then he might seek a judgment in court to collect it. Or else, the creditor can ask for garnishment of your wages.
Moreover, since the loan isn't taken against the CA home, therefore when you have quitclaimed it already to your husband, the home is well-protected.
However, I still feel that you should have an open talk with the lender regarding the payment of the deficiency – whether he'll sue you or whether he can forgive the deficiency part or not. Although, if he forgives that part of debt, he may have to pay tax on it, until and unless the IRS enforces the law of not collecting taxes on such canceled debt.
Regards,
Jessica.
Welcome to our community forums.
You will be doing short sale on the investment property in Florida, so this won't affect your primary home in CA. I mean the loan is against the Florida property, so the creditors/lenders won't come after your CA home. By the way, do they even know that you have a home in CA? If they don't, then you need not worry.
At the most, if the lender can ask for the difference between the mortgage balance and the short sale price and if you are unable to pay it off, then he might seek a judgment in court to collect it. Or else, the creditor can ask for garnishment of your wages.
Moreover, since the loan isn't taken against the CA home, therefore when you have quitclaimed it already to your husband, the home is well-protected.
However, I still feel that you should have an open talk with the lender regarding the payment of the deficiency – whether he'll sue you or whether he can forgive the deficiency part or not. Although, if he forgives that part of debt, he may have to pay tax on it, until and unless the IRS enforces the law of not collecting taxes on such canceled debt.
Regards,
Jessica.
It depends if Florida is a "deficiency" state. That is, whether they can come after you for the balance after foreclosing. I don't know; you should check with a Florida attorney. If they can come after you for the deficiency, first they must file a lawsuit and get a judgment. Then they must apply for a California judgment based on the Florida judgment. This is called a "sister-state judgment".
Transferring your house out of you name may protect it, but if it was done to avoid paying the judgment, it could be considered a "fraudulent transfer" and avoided by the court.
You should always put investment properties into a legal entity, for instance, a Limited Liability Company, in order to protect your personal assets.
Transferring your house out of you name may protect it, but if it was done to avoid paying the judgment, it could be considered a "fraudulent transfer" and avoided by the court.
You should always put investment properties into a legal entity, for instance, a Limited Liability Company, in order to protect your personal assets.
