QUESTION
If a person dies and leaves everything to the estate, can the home loan be abandoned?
Asked on Feb 04th, 2013 on Estate Planning - Colorado
More details to this question:
Will any of the loan need to be paid back if there is other assets in the estate?
14 ANSWERS
Estate Planning Attorney serving Wilmington, DE
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Reger Rizzo & Darnall, LLP
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There is a preference for debts to be paid in an Estate. If there are assets, and a home is an asset, the loan would have to be paid or they can force it to be sold or foreclose on it.
Answered on Feb 05th, 2013 at 3:08 PM
Business Law Attorney serving Livonia, MI
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Gerald A. Bagazinski
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A very tricky question. Yes the home can be abandoned by not accepting the responsibility for the asset. The mortgage company could seek a deficiency judgment on the abandoned asset. Careful negotiations withe the mortgage company offering them a deed in lieu of foreclosure might help avoid a deficiency judgment.Be sure to file a creditors notice.
Answered on Feb 05th, 2013 at 3:07 PM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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The bank is entitled to their money, or they will foreclose on the residence.
Answered on Feb 05th, 2013 at 8:02 AM
Real Property Attorney serving Utica, MI
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Douglas A. Tull, P.C. Attorney at Law
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The Loan which is secured by a mortgage on the house of a decedent -usually is a debt of the decedent and must be repaid - if it can't be repaid and the loan defaults - the bank can foreclose and look for their money that way, or pursue their note obligation from the other assets that pass through the estate. You can't "abandon" a loan that is secured by a house - you can fail to pay and have it go into default.
Answered on Feb 04th, 2013 at 10:20 PM
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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"leaves everything to the estate?" I don't know what that means. Reading between the lines of your question, it looks like a common story these days person died leaving nothing but a home which is subject to a mortgage which is more than the current value of the home. In that case, the house can be "abandoned" by the personal representative (talk to the mortgage company; there are easy ways to do this, and hard ways). Of course, if there is equity in the house, see if you can't work things out to at least save the equity, perhaps by selling the property.
Answered on Feb 04th, 2013 at 5:35 PM
2 Awards
If the property is part if the estate the mortgage is a debt of the estate. The house can be sold to pay it off however.
Answered on Feb 04th, 2013 at 5:34 PM
Commercial Contracts Attorney serving Boise, ID
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Peters Law, PLLC
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Yes the loan has to be paid. Why wouldn't it? More importantly, there is probably a mortgage on the property and if the loan is not paid, the mortgagee will foreclose on the property.
Answered on Feb 04th, 2013 at 5:34 PM
Thomas Edward Gates
The loan cannot be abandoned. The bank cannot require that payments be accelerated, so as long as the mortgage is being paid on time, the bank cannot take any action.
Answered on Feb 04th, 2013 at 5:34 PM
Business Planning Attorney serving Livonia, MI
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Frederick & Frederick Attorneys at Law
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The answer depends on whether you intend to try to keep the property or not. If the answer is no, then you may not need to pay anything from the other assets. It is possible for the lender to make a claim against these assets, however. There are exemptions and allowances that might apply. You should review this with an attorney.
Answered on Feb 04th, 2013 at 5:34 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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Yes, the estate is liable to pay all of the deceased debts.
Answered on Feb 04th, 2013 at 5:33 PM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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You have not provided sufficient info to give a definitive answer. However, usually, the lender on a home loan only can look to proceeds of it to be paid back. Other assets remain available to beneficiaries of the estate.
Answered on Feb 04th, 2013 at 5:33 PM
Estate Planning Attorney serving Marquette, MI
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The Wideman Law Center, P.C.
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Yes, creditors get paid before gifts are made from an estate. The company with the loan probably has a lien on the property so you will not be able to sell it without paying back the loan.
Answered on Feb 04th, 2013 at 5:33 PM
3 Awards
In Nevada, we oftentimes petition to get authority to abandon. You should address the specifics with an attorney of how best to accomplish your objectives yet properly administer the estate.
Answered on Feb 04th, 2013 at 5:32 PM
Generally, yes. The holder of the mortgage may pursue the estate of the obligor on the mortgage. However, there are deadlines and time requirements. You should consult with an attorney specializing in probate and estate administration for further guidance.
Answered on Feb 04th, 2013 at 5:31 PM