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Can a quitclaim property be used as a collateral?

Resolved Question:

Can a quitclaim property be used as a collateral?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  RealEstateAnswer replied 1 year ago.
Hi! I will be the professional that will be helping you today. I look forward to providing you with information to help solve your problem.

Good morning. Is the property owed free and clear or is there a mortgage on it? Also, what is the reason that the property needs to be put up as collateral?
Customer: replied 1 year ago.

The property is free and clear, no morgage

Expert:  RealEstateAnswer replied 1 year ago.
Ruth, thank you for the additional information. If the property is owned free and clear, then it could be put up as collateral to act as a security interest on the loan or transaction. A quit claim deed is a method used to transfer the ownership interest of a piece of property, without any guarantees to its title or condition. Depending on what the transaction, you likely want to incorporate this into the contract and have language in the contract in regard to a breach of the agreement and how the property will be used,disposed or transferred. To sign a quit claim deed prior to any breach, it likely not the best idea, since you would be giving away your ownership interest without any reason to. As long as the agreement is complied with and payments are made, the property should never be an issue.

Please let me know if you have any follow up questions or need any clarification on something which I stated above. Also, remember to rate my service before exiting the site, so I can receive credit for my help. I hope you found it to be Excellent! Only rate my answer when you are 100% satisfied. If you feel the need to click either of the two lower ratings to the left, please stop and reply to me. I want to make sure your experience with the site was as pleasurable as possible and that you are satisfied with the help I provided.
Customer: replied 1 year ago.

We were turned down for a small loan to help my mother with home care expenses ,we put her condo up as collateral,again the condo is clear and payed for ,they turned it down because the property is on a quit claim to me Ruth.

Expert:  RealEstateAnswer replied 1 year ago.
Did the lender tell you why they would not allow this? Was this their suggestion or yours?
Customer: replied 1 year ago.

They said that my mother still lives there. And they could not do it, I have an excellent income and would be responsable for payments

Expert:  RealEstateAnswer replied 1 year ago.
If you have excellent income, good credit and willing to sign on the loan, there should be no reason that they should deny you. If they want collateral, they can request it and I would assume that their reason for denying the use of the property to obtain the loan, is a result of them not wanting to have to deal with selling it and/or evicting your mother, in the event of default. The lender wants the loan repaid each month, along with the interest. In the event of default, they would rather sue you and obtain a judgment, then have to deal with taking the property back, selling it, evicting your mother and any other costs associated with it. They have a right to deny the loan, since it is their money and at their discretion to lend it. However, this does not mean a different lender is going to do the same, so you should try and reach out to another bank.
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Category: Real Estate Law
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Experience: 8+ years in handling Leases, Landlord-Tenant, Foreclosures,Mortgages, and Eviction cases
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