A person can transfer ownership in real property to a third party via quitclaim deed and this can occur even if the property is mortgaged. But a number of situation-specific considerations must be reviewed.The mortgage is a lien or encumbrance on the title to the real property.\u00a0 So if a mortgage is filed of record, the person to whom the property is transferred takes title to the property subject to the mortgage (i.e. he or she will be required to pay or satisfy the mortgage before it is released from the title to the property).<\/p>\n
And thus, in general, the mortgage writer does not need to consent to the transfer of the property simply because it holds the mortgage.<\/p>\n
However, the person taking title to the property takes the property subject to the mortgage, which will remain with the property until the underlying loan is paid off.<\/p>\n
But an important exception exists: in many cases, a mortgage may contain a “due upon transfer” clause. A “due upon transfer” clause means that the loan which is secured by the mortgage will become immediately due and payable in full if the property is transferred to a third party. (Note that transfers to living trusts created by the owner of the property are usually exempt from this clause, but it is critical that the language in the document be reviewed in detail.)<\/p>\n
So if a mortgage does not contain a “due upon transfer” clause, the full payment of that mortgage is required to satisfy the mortgage and allow for the transfer of title to the deed holder at the end of the payment period.<\/p>\n