Knowing How to Handle Your Loved One’s Mortgage is Important
With almost every mortgage lasting several decades, having a mortgage last longer than one’s lifespan is all too common, meaning that there may be money due to the mortgage company after a loved one passes away. Knowing what your rights and responsibilities are when it comes to real property that is subject to a mortgage is important and having a New York City estate attorney advocating for you is the best way to make sure that your ownership interest is protected from foreclosure.
Mortgages don’t work like other types of debt in New York City. With most types of debt, beneficiaries are not required to pay a decedent’s debts outside of some restricted situations such as being a cosigner. With mortgages, there are different types of issues that come up, meaning that the normal rules regarding estate debts do not apply. This is because mortgages are secured by real estate, rather being unsecured, such as is the case with credit card and other bills.
If the decedent held the mortgage on real property jointly with someone else, such as a spouse, business partner or children, the surviving parties will still be responsible for keeping up to date on the payments to the mortgage company since the surviving parties would be considered to be the owners. This works similarly to other types of debt where there is a cosigner or where the debt was otherwise jointly held.
Where the issue of foreclosure after the death of a mortgagor becomes more complex is when the property in question is being bequeathed to those who are heirs of the decedent but are not co-borrowers on the loan. If that is the case, the executor or administrator of the estate needs to contact the mortgage company and make sure that the mortgage is kept up to date or risk that mortgage being foreclosed on. If this is not done, the bank could foreclose for the missing payments, just as it would have if the original mortgagor was alive. This would have to be done until either the real property is sold or an heir to the property assumes the remainder of the loan.
Also complicated is what kinds of liens there may be against the property in question at the time of death, along with if there are foreclosure actions that began before the death of the mortgage holder. Things such as estate taxes or real estate taxes could all present a lien on the property and make it subject to foreclosure, the same as a mortgage would. Also, if there is a pending foreclosure on the real property, the mortgage company or another party would need to make sure that the estate’s personal representative is given proper service for any foreclosure proceedings if there has not been a judgment issued before the decedent passed away.
One of the best ways to prevent foreclosure is to work with a New York City estate attorney to set up a great estate plan so that any real property that you wish to leave to your heirs is in place. This could involve setting up things such as insurance to pay the remainder of your mortgage and other expenses after you pass on so that you leave your family on the most secure footing.
If you are an executor dealing with a mortgage or are planning for your estate, call the Law Offices of Albert Goodwin at (212) 233-1233 and schedule a consultation with a New York City estate attorney.