Can I Sell a House With a Mortgage in a Deceased Person's Name?
A death can create anxiety and uncertainty regarding property that the deceased person owned. There are many ways to pass property on, and heirs may worry about their rights to ownership. It is common that a property passed on as part of an estate will have a mortgage attached to it. The mortgage will follow the property, and if the house itself is inherited then the heir or beneficiary typically has the ability to sell it.
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Selling Potential
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You can usually sell a home you inherited even though it has a mortgage with the name of the deceased attached to it. However, just because it can be done does not mean the issue is simple. In many cases the sale is unavoidable. In other circumstances it depends largely on how the property is passed along. But the death and the mortgage will not typically prevent the sale itself.
Selling Process
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When a house is part of a deceased person's estate, it is usually sold off by the estate and whoever is the executor. This occurs because all debts — including mortgages — owed by the deceased person must be paid off before the property can pass into the hands of beneficiaries. If there is enough cash or value in other assets, then the executor may be able to pay off the mortgage without selling the house. But in most circumstances the house must be sold to pay off the mortgage. Extra proceeds will go to the beneficiaries.
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Selling Issues: Ownership
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Ownership plays an important role in the selling process. If the house is only owned by one person, the deceased, then the sale can be used to pay off the debt. But for certain types of ownership, such as a joint tenancy with rights of survivorship, ownership in the property is split and the portion owned by the deceased is immediately given to the other joint owners. In this case, the mortgage is usually taken out in the name of all the owners, so that the debt and the decision of what to do with it passes directly to the other parties.
Selling Issues: Mortgages
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Mortgage contracts also play their part in deciding whether you can sell the house. Some mortgage contracts allow for assumed contract by other owners and beneficiaries. But some require sale upon the death of the contract holder, if there is only one name on the contract. Mortgage, ownership and state law issues can often create a legal tangle that only an estate attorney can sort out, so if the situation is complex you may want to consider legal aid.
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