Inheriting a property can bring a lot of baggage that you might be unprepared to deal with. You could unknowingly inherit a property that has a large mortgage or is at risk of foreclosure.
You have options if there’s a mortgage or foreclosure as the heir to the property. Depending on what you want to pursue, you can take a range of actions. If you don’t want to have to deal with the property, you can legally get rid of the responsibility in several ways. If you’re interested in keeping the property, there are also different ways to go about that.
A foreclosure attorney can help you through the steps you may need or decide to take while helping you understand what it means to inherit a property that’s at risk of foreclosure. Joshua Denbeaux is an experienced New Jersey foreclosure attorney who has helped hundreds of homeowners through the foreclosure process. Contact Denbeaux & Denbeaux Law today to learn more about how we may be able to help you.
What Happens if You Inherit a Property That’s Being Foreclosed On?
If you inherit a property that is already being foreclosed on, the mortgage company has to take certain steps before they can continue with the foreclosure. A mortgage company can’t foreclose on a deceased person, which means that they have to change the litigation. The lender must include and name any heirs, executors, and administrators who may have inherited the property or have control over it.
Some lenders may try to proceed with the deceased parents’ home foreclosure without properly notifying the heir. If the mortgage company fails to notify you of its intent to proceed with the foreclosure before the final judgment, you may be able to file a motion to halt the process completely.
How Do Debts Carry Over When I Inherit Property?
The executor of the estate is responsible for working with creditors to resolve any debts that the deceased individual had. It’s important to note that the debts won’t be applied to any inheritor and hurt their credit. When you inherit property that is in foreclosure, it does not affect your credit in the same way it would have if you were the borrower. Lender actions are against the borrower and won’t be imposed on the inheritor.
However, the debt must still be paid when you assume control of the property. If you fail to take action on an inherited property that has debts associated, you may eventually affect your credit score over time in certain cases.
Options to Avoid Foreclosure on Inherited Properties
It’s important to understand your options when you inherit a home or other property that has debts or is going into foreclosure.
Selling The Property
One of the most common options is to get the monetary value out of the home as much as possible because you don’t plan on keeping the property yourself. If you’ve inherited a home at risk for foreclosure or a sheriff’s sale, you can file a motion with the court to sell the property. This is an option people often consider because it can help save equity previously built up in the property.
Positive equity means that the home would be worth more in a sale than the amount that is owed on the mortgage. If you have positive equity, you can be able to sell the house and pay off the loan in full and inherit the value of the remainder. Depending on how much the house is worth and how much is owed, you might even have money left over after.
Taking Over The Mortgage
If you plan on using the property, you’ll still need to pay the mortgage. You can assume the mortgage and make payments to retain the property. Unless you’re a co-signer on the loan or share the title of the property, you’re not obligated to pay the mortgage off in foreclosure. While you’re not obligated to assume a mortgage from your parents, you can choose to start paying off the mortgage if you wish to keep the property.
Estate Covers Remaining Mortgage on the Property
As part of handling the estate, the executor should inform you of the value of the estate. The lender should inform you of how much money is owed on the mortgage. Once you’re aware of the value of the estate and the amount that’s owed on the mortgage, it’s possible that the value of the estate could pay off the mortgage, allowing you to keep or sell the property without worries about foreclosure or existing debts.
Contact a Foreclosure Attorney Today
If you are trying to navigate a foreclosure on an estate property, there are options that can help you avoid being involved in foreclosure or stop a property from being foreclosed on. You can also use different strategies to get the most value for the property, depending on the details of your situation and the estate.
Consulting a foreclosure attorney can help you navigate the process of inheriting a property that’s at risk of foreclosure while helping you explore avenues you might not have considered.
Contact Denbeaux & Denbeaux Law today to schedule a free consultation to learn more about how we may be able to help you.