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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 37927
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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my son quick claimed his house to me as collateral for legal

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my son quick claimed his house to me as collateral for legal expenses he is incurring in a criminal case. After the quit claim he learned there is an audit in progress which may lead to additional charges and judgements against him Since his biggest asset, the house, was transferred to me are we liable for fraud and deception to avoid the judgement. As yet, no charges related to fraud have been made by his employer nor any judgements brought.
Submitted: 1 year ago.
Category: Legal
Expert:  Dimitry K., Esq. replied 1 year ago.
Thank you for your question. Please permit me to assist you with your concerns.

How long ago was the home quit-claimed? Was there a value placed on the quit claim? How much is the home appraised for and how much did you advance the son for his fees? Did you record the quit-claim transfer?
Customer: replied 1 year ago.

approx. three weeks ago. There was no value placed on the quit claim. the home was tax assessed at 175, 000 . My son was advanced 700 for bail and 7800 for attorney fees. the quit claim was processed by an attorney and recorded.

Expert:  Dimitry K., Esq. replied 1 year ago.

Thank you for your follow-up, Frank.

Typically a quit-claim transaction between family members does not raise eye-brows. But if your son is in the midst of litigation and the other party prevails, they can go to court and attempt to reverse the transaction based on fraud. This is why I asked you as to what the value for the quit-claim ultimately was--if there was value associated with the transfer that is close to the market value of the property, it is harder to reverse since there is less of an argument that the property was removed as a means to defraud (the other party received compensation so it was not an empty transfer). In this case, if the other party did not yet file a civil claim, you are likely fine because to claim 'fraud', the other party must show that there was a civil claim in place and that is what is being avoided. There is no civil claim yet, the charges are criminal, so it is a harder argument to make for the opposing party should they ever choose to file suit.

Good luck.

Customer: replied 1 year ago.

I can call the atty and ask if a value was placed on the quit claim and get back to you. My son has not as yet been charged with a felony related to the accounts he managed. However, his accounts are being audited by the company and insurance claims may result. At this point his charges are petite but his atty expects felony charges related to his managed accounts. I do not understand the relationship between value of the quit claim being close to market and the difficulty of a reversal and the argument that the transfer was an intent to defraud.

Expert:  Dimitry K., Esq. replied 1 year ago.

Frank,

It works a bit like this--let's say your son had a $10,000 car that at a fire sale he could sell for $8,000. If you give him $200 for it, it looks less like a real transfer and more like a fraudulent attempt to hide assets. But if you give him closer to the market value, the transfer begins to look more and more legitimate and therefore harder to claim as fraudulent, and consequently harder to reverse. If a home is worth $175K, and you gave him about $1,000 to get him out out of jail, it is a far easier argument to make that this was done to defraud and avoid creditors. The upside here is that there is yet no civil charges, so there is as yet nobody to defraud.

Good luck.

Customer: replied 1 year ago.

Thank you for the clarification. I should also mention that his motivation for the quit claim is to make it less likely that his estranged wife does not receive monies from the sale of the home. Her name was not on the deed and Virginia law does provide for communal sharing in a divorce case. I am listing the home and intend to use the proceeds for another home for my son once his litigation is resolved and there are no judgements pending. I live in California.

Expert:  Dimitry K., Esq. replied 1 year ago.

Thank you for your follow-up.

Then the spouse can potentially contest the transfer should file for divorce. While she cannot go after all of the proceeds, she can go after any profit or growth in value. If the home was worth $150K at time of marriage and you manage to sell it for $175K, she can argue that the $25K is a marital profit to which she is entitled to a half share. I cannot guarantee that she would contest it, but if she retains counsel, her counsel will almost certainly attempt to contest.

Good luck.

Customer: replied 1 year ago.

The wife implemented the paperwork for the quit claim and moved out of the house. In the event of judgements and charge of fraud could the quit claim be justified as my son's attempt protect the asset of the house for himself?

Expert:  Dimitry K., Esq. replied 1 year ago.

Frank,

I cannot answer that as it would be up to the judge to rule on the transfer as whether it was valid or not. But typically avoiding giving it to the spouse is not a valid basis or a justification for the transfer.

Good luck and take care!

Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 37927
Experience: Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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