This could be a good thing, financially, even though someone close to you died because you inherited a house. If you are indeed, the heir, ownership of the property passed to you upon their death. Quite often you now own a house which is worth a fair amount of money.
But what do you do about the amounts that are owed on the property?
You Also Assume the Debts
When you assume ownership of the property, you also assume any debts, such as the mortgage, taxes and / or condo fees, both past and present. Any liens on the property are your responsibility. If you sell the property any expenses associated with the property are also your responsibility. If the property is worth more than the debts owed, you’re in good shape.
Do I Owe More than it’s Worth?
But what if the debts on the property exceed the value? Actually, this is quite possible.The mortgage balance may be more than the place is worth. There may be back taxes. Does this mean you need to reach into your pocket to pay the deceased person’s debts?
If you haven’t gone through the process of probate, you may have gotten lucky. That’s because the claims aren’t against you. The claims are against the home’s original owner. You’ll need to act quickly before taking ownership,. If you find that there are more debts than the estate’s value, you can let the home to go into foreclosure. Then the foreclosure gets assigned to the deceased’s credit report, not yours. If the debts are not paid, usually the debt holder’s recourse is to foreclose on the property. You could possibly offer the ownership of the property to the debt holder in lieu of foreclosure. Many banks would accept this plan, as it would avoid going through the expense of a foreclosure.
My suggestion to you is to contact a real estate attorney and an accountant. This way you can get the legal and financial advice you need to protect yourself.
But if you’re not planning to move in, you’ll need to either sell or rent the home. Guess what? We’re Realtor and we can help you with that. Call us – Bunny and Art Reiman – The Adult Community Specialists.