My husband and I set up a Living Trust in 1999. After investigating how to transfer our home into the trust, we were advised that recording any deed would alert our mortgage company to call our loan due using the Due-On-Sale clause. Therefore, the years have passed without transferring the house into the trust.
In December, a good friend and client was killed instantly in a motorcycle accident. His death shocked us into the reality that we needed to finally take action. Upon further investigation with an attorney, a federal statute now prohibits banks and mortgage companies from using the Due-On-Sale clause if the deed transfers the property into a trust. The mortgage company may require a copy of the pertinent articles of the trust to approve the language in the deed and the trust concerning the property. If you are planning on re-financing, the process is made significantly easier if the mortgage company approves the trust in conjunction with re-financing the property since the prior first mortgage will be paid and the entire process is done upon closing the new loan.
If the property is a homestead and the deed is recorded without prior notification with the Tax Assessors office, any existing homestead exemption may be eliminated thereby terminating the Amendment 10 yearly 3% increase cap. Therefore, prior to recording the deed, a call to the Tax Assessors office to obtain a case number is necessary. Upon obtaining a case number, the tax office will require a copy of the trust. An estate attorney advised us that we can not be required to provide the confidential information and should omit the “after death articles” since the sections the county wants to review are only used to determine if it’s a homestead. It would be advisable to make an appointment with the specific person at the Tax Assessor’s office to deliver the trust so the privacy of your wishes are protected.