The language that is included within the mortgage document is critical in evaluating what steps should be taken when transferring to a Living Trust any real estate that is still tied to a loan. <\/p>\n
Typically, a transfer of real estate into a Living Trust is handled via a Quitclaim Deed, so that the Trust can be “funded” with the property.<\/p>\n
Most real estate mortgages state that any transfer of a property makes the loan note on that property due and payable EXCEPT FOR transfers to a Trust where the Grantor reserves the right to revoke the trust (i.e. a Revocable Trust). <\/p>\n
So in most cases, funding a Revocable Living Trust with real estate property financed by a loan will not result in the execution of a “Due on Transfer” clause of the note and mortgage on that property.<\/p>\n
But before you execute any transfer by Quitclaim, read your specific mortgage documents carefully for the details of your loan!<\/p>\n
Additionally, if private mortgage insurance (PMI) covers the property because the owner’s equity is of a low amount, you should also examine those documents carefully to note if any stated restrictions or limitations exist.<\/p>\n