Okay, it's time to join the kids and play "good news, bad news." The good news is that you got a phone call from your great uncle's attorney. You have an inheritance!
The bad news is that it's a condo. In Florida. And he bought it in 2006. And it's mortgaged to the hilt. Oh, yeah, with a sub-prime loan.
You can't refinance; the place is worth about half of what's owed. You don't want to move to Florida. And rental income wouldn't come close to cracking the nut on that home loan.You can't afford this.
Are you stuck with the property?
Good news. You are not. In most states, an estate's assets are sold off to repay creditors and anything left over is distributed according to the decedent's will or state law if there isn't a will. Unless you are listed as a co-borrower or co-signer on a loan, you as an heir cannot be held responsible for its repayment.
Bad news. We die.
Good news. Our debts die with us.
8 Responses to "Good News, Bad News: Inherited Property with Mortgage Baggage"
My father died in 2007. I had been living with him. He refinanced his mortgage without consulting any of us, his children. I have five siblings. I have paid the mortgage since 2007, but it's not yet in my name. I have proof that I have paid the mortgage and the land taxes since then. Is there a way to have the title transferred into my name without having my siblings involved, or going through probate court?
Well, if I couldn't be sure of quieting the title I'd hesitate to pay taxes too. but I'd also hate to leave $100,000 on the table. I'd think about initiating a quiet title action. Texas case law defines the term cloud on title as an encumbrance apparently valid but in fact invalid. Your lawyer may also tell you that paying the taxes is required to support your claim of ownership (adverse possession).
As a paralegal I worked on several and they weren't particularly expensive efforts. Regarding your credit? Offhand I'd say that if the property has been yours for two years and you don't pay the taxes then the county will likely use every remedy at its disposal to get the money. These remedies range from tax liens (which appear on your credit report) to withholding DMV registration (which wouldn't affect you if you don't live in Texas).
There was no will. All expenses were paid at probate closing. Later,
the property manager did not pay the property taxes for 2 years so the taxes
are delinquent. I have beeen told that getting clear title would cost $20,000
without a guarantee of ever getting title(very common with "heir property').
The property value is assessed by the county at $120,000. No conventional
buyer would purchase the property without title. I have the funds to pay the
taxes. That is not the issue. I just want out of the property without having
my credit damaged. I live in Florida. So I believe that contacting a Texas
attorney in regards to my credit is my best solution. Thank you for your
comments.
Robert,
Ordinarily, when there is an estate, the expenses owed by the estate are paid before the remaining assets are distributed to the heirs. The executor of the estate should have paid the property taxes before transferring the property to you. Once you own the property, you are responsible for the taxes. Do the taxes exceed the value of the property? Who is the owner of record now? You say the title is not clear. Would you be able to sell it and pay the taxes? If you are not the owner of record and can't sell the property, it seems unlikely that you'd not be on the hook. If it is not in your name yet, you can refuse or disclaim an inheritance. I suggest that you speak to a probate lawyer if this is a big deal.Here's the scoop on refusing an inheritance: http://www.investopedia.com/articles/06/RefuseInheritance.asp
Although my inheirited Texas property has no mortgage and no
clear title, can my credit be damaged by not paying delinquent
property taxes and ultimately allowing the property to go into
foreclosure?
Yes. You are not on the mortgage, therefore your credit is not impacted. You may also offer the lender a deed-in-lieu of foreclosure and save yourself the hassle of selling.
Gina,
This entry describes exactly the position I'm in.
My father died without a will, leaving my disabled brother and myself two properties. Upon his death, one was already in default and in the short sale process. As administrator, I managed to short sale that one at the beginning of the probate process.
Now, as I'm closing the estate, I'm finding that his primary residence (which we've rented through probate) is mortgaged to the hilt, is worth nowhere near the loan, and we can't continue to rent it out and make a dent in the loan.
If I'm reading correctly, after probate closes, I can try and short sale the property with no impact to my credit?
Thanks.
hilarious. doesn't apply to me but a good read anyway.