Here are some considerations to work through with your son in planning the best path to take to fulfill your obligations:
Talk to your mortgage lender first. What does the mortgage contract with the lender say about deeding the home to another person? Many mortgage loans prohibit a transfer, have pre-payment penalties, or must agree to any transfer. This step is critical because it will influence your actions to transfer the title.
Are you planning to transfer the property after paying off the loan? If you expect your son to continue making payments, he may have to qualify with the lender. Who is going to continue to pay the mortgage?
How will you establish value in your home? Is your intent to rid yourself of a monthly payment? Do you want to gift your son any equity you have in the house? What you are planning will affect the order of the steps. Involving your son in the conversation and ensuring he agrees with the plan is essential. To properly transfer the title, there must be a value established to record the deed.
For example, if you are gifting him the equity, and the home is worth $300,000, you have $183,000 in equity. He may want to refinance the current loan and walk away from the closing with cash. On the other hand, if the home is worth $115,000, you are likely not doing him any favors unless you satisfy the mortgage.
Why are you considering a quitclaim deed as opposed to a warranty deed? The difference between the two deeds is that you are not warranting the title during your period of ownership with a quitclaim deed. You are warranting your interest in the property. While the quitclaim does transfer title, there are no warranties. If there is a cloud on the title from a prior owner, that could burden your son should he decide to sell. Do you have other children? In the future, could they claim an interest? Title companies will often require additional documentation when a quitclaim deed is present. A warranty deed guarantees the title back to the date of creation of the parcel. There is an article from Bankrate.com with more information on the differences.
Keeping the transaction simple with a quitclaim deed is the easiest option. Every state has its interpretations of the title transfer theory. Consider seeking an opinion from a real estate attorney who can better direct you once you have determined the answers to the above assorted questions. This Dear Monty article describes an excellent method to find an excellent real estate attorney. That attorney will have more detailed answers not addressed here.
