The Tennessean reported yesterday that Kelley Cannon, convicted earlier this year of murdering her estranged husband, is trying to sell the family’s former $720,000 home to pay her legal expenses.
After the initial surprise, the question remains: Can she do this? According to the property records, she’s the only person who can sell the property. That’s because her husband quitclaimed the property exclusively into her name in 2005. The article says that the 2005 Quitclaim Deed was for “estate planning purposes” and because Jim Cannon had bad credit.
This is a fairly common practice. An individual entering into a high risk business venture or who sees potential collection lawsuits on the horizon may be inclined to transfer property out of their name and into a “safe” person’s name. The goal is to keep the valuable property out of the reach of creditors, and the “safe” person is generally a trusted relative or friend who has no financial issues.
From a creditor’s perspective, these types of transfers may later be avoided as a fraudulent transfer, as long as suit is filed within four years of the transfer.
But, there is also risk to the transferor, because he or she is transferring valuable property to a third party but isn’t retaining any ownership interest. Although the Cannon situation is an extreme example, in any such transfer, there’s always some risk that the “safe” person may not stay safe, whether it be a soured relationship or financial hardship.
Murders may be rare, but divorce or business disputes happen every day. Think before you quit-claim property.
One thought on “Be Careful When You Quitclaim Deed Property”