[{QUOTE]Originally posted by KCH:
Last year I purchased my mother's house by refinancng & taking over the mortgage payments. She also deeded the property over to me. In addition to this she asked for $40,000. I recently drew up a contract stating that I would start paying her this year. My mother doesn't believe this promissory note is legal & secondly wants my husband & myself to quitclaim deed the property to her as collateral until the debt to her is totally repaid. Is this appropriate & what are my alternatives?[/QUOTE]
A signed promissory note is legal. It can be secured by a deed of trust against the property. You would still own the property, but payment on the note would be secured by the value of the property. The Deed of Trust can be recorded. If no other deeds of trust exist, your mothers would be a first. If after that you get an equity loan, that loan would be secured by a second deed of trust. When (if) the property is sold, the debts secured by the deeds of trust are paid off, in order, and if anything is left over, the owner gets the remaining monies from the sale.
