Navigating Estate Inheritance and Mortgage Issues After a Homeowner's Death

When a previous homeowner passes away, it's important to understand the process of acquiring the property and securing a mortgage to sell it later. This guide outlines the steps and clarifies common misconceptions regarding property inheritance and mortgage concerns.

Understanding Property Inheritance

It's a common misconception that one can simply obtain a mortgage on a deceased homeowner's property to sell it later. However, the process is more complex and involves obtaining the property from the estate and dealing with any existing mortgage.

Unless your lease has a specific provision dealing with the death of the homeowner, the property will generally go to the homeowner's heirs. In such cases, you have the option to buy the property from these heirs. If you have the means and interest, purchasing from the heirs and obtaining a mortgage can be a viable route to acquiring the property.

The Role of the Mortgage

The mortgage on the property is a lien against the asset held by the mortgage company. It serves as security for the loan used to purchase the property. When you purchase the property, the loan will be reconveyed, and a new mortgage may be taken out by the new owner. The mortgage company does not have a say in who sells the property; they are only concerned with being repaid upon the sale of the property.

Understanding Estate Distribution

When a homeowner dies, the house becomes an asset of their estate. One of three scenarios is likely to unfold:

If the homeowner left a will, the assets, including the house, will be distributed to the beneficiaries as specified in the will. Sometimes, specific items may be left to specific beneficiaries.

If no will exists, the courts will intervene and decide who gets what. This process can be lengthy, often taking months or even years.

Probate laws vary by state and can take a minimum of six months in some states. The process can be quite involved, and only estate beneficiaries can inherit assets, including the house.

Even if you are a potential beneficiary, it's crucial to follow the defined steps and contact the executor of the will or the heir of the house. It's important to understand that you cannot simply "steal" the property or obtain a mortgage without proper legal proceedings.

Steps to Buying the Property

To buy the property, you should contact the estate and offer to purchase the house. This approach can sometimes provide a good opportunity to acquire a reasonably priced home without the complexities of inheritance laws.

Here are the key steps:

Contact the executor of the will or the heir of the house.

Discuss the possibility of selling the property.

Comply with any legal requirements or steps required by the state's probate laws.

Enter into a purchase agreement.

Obtain any necessary mortgage to finance the purchase.

It's important to note that proceeds from the estate settlement, including the property, will fall to the heirs. Trust beneficiaries have the first claim, followed by estate beneficiaries. Understanding who has priority ensures a smoother process and avoids any legal disputes.

Conclusion

Securing a property and a mortgage after the death of a previous homeowner involves a series of legal steps and considerations. By understanding the process and engaging with the appropriate parties, you can navigate this complex situation effectively. Remember, the key is to work within the legal framework and ensure that all steps are legally compliant.