Real Estate editors and columnists occasionally receive queries from readers about buying and selling, renovation and other issues associated with home ownership. Harvey S. Jacobs, a real estate attorney and columnist, answers this reader’s question about altering a title upon the death of a joint owner.
My question concerns a home mortgage. In 1998 my husband and I bought a North Arlington home with joint title. He died in November 2011 and the next month I called and then faxed a request that the mortgage holder remove my husband’s name from the mortgage.
In May, the bank sold the mortgage to a new lender. I learned that my late husband’s name had not been removed before the loan was transferred, so I made the same request of the new lender, and the company has not made the change – and in fact has given conflicting information over the phone and by letter concerning the process required to do so.
If the new lender requires a loan assumption (that’s where they’ve given conflicting instructions), should I proceed with that? Or is there any other preferred action?
Thanks in advance for your help.
Katherine R., Arlington
If you owned the home as tenants by the entirety (t/e), upon your husband’s death, you became the owner of 100 percent of the home and responsible for 100 percent of the loan’s outstanding balance assuming that you signed the mortgage note along with your husband.
If these assumptions are true, you need take no action all. You certainly do not need to go through the hassle of an assumption. There is a step or two that you may want to take to clarify and confirm your title. For example, you may want to record a copy of your husband’s death certificate in the land records of your county and perhaps record a confirmatory deed reflecting that you are the “sole surviving tenant of a tenancy by the entirety with” your husband’s name and the date he died.
That way if you go to sell or refinance, the title searcher who researches your chain of title at the courthouse will know what happened.
Your situation illustrates why it is important to pay careful attention to the manner in which you hold joint title. Married couples who buy property together should generally hold title as tenants by the entirety. This form of title is often referred to as being the “strongest” form of title since property held as tenancy by the entirety is safe from the creditors of just one tenant.
In order to attach property owned by a tenancy by the entirety, the creditor would have to be a creditor of both tenants. The sole exception to this creditor protection is if the creditor is the Internal Revenue Service. The IRS can attach property owned by a tenancy by the entirety even if it has a claim against one tenant.
One other thing to understand is that in the event of the death of a the last surviving borrower, the lien remains against the home and the lender may make a claim against the estate for the payment of that loan. While the heirs never automatically become personally liable to pay off the loan, the property remains encumbered by the lien and any funds in the decedent’s estate may be used (subject to other claims and terms of any will) to pay off the loan.
If there are no other estate assets and the property is conveyed from the personal representative of the estate to a beneficiary, that beneficiary will take title to the house subject to any and all existing liens against the house. If the house is worth less than the amount owed to the lender, the beneficiaries who were left the house can disclaim their inheritance.
There are very specific rules and deadlines governing these procedures, so if you find that you may want to take these actions you should consult a trust and estate attorney practicing in your local jurisdiction for assistance.
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