Can You Put a Lien on a House With the Owners' Deceased?
When a debtor passes away, you may assume he is no longer responsible for his debts; however, a debtor is not freed from the responsibility of repaying debt upon the event of his death. The repayment of debt falls on the debtor's estate. In the case where there was a co-signor on the mortgage, the co-signor is now responsible for the remaining amounts owed.
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Debtors Estate
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When a person dies, everything he owns becomes his estate. An estate is not only property, such as a home, but also includes items like cars, clothing, electronics, insurance policy proceeds or anything else of value. The executor will pay off debt and once the debt is paid the remaining portions of the estate are distributed to the beneficiaries. An executor can be named in the deceased person's will or assigned by a probate court in cases where an executor was not named or a will is challenged.
Executor
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In most cases, an executor of an estate is responsible for opening a bank account that will be used to repay any remaining debts as well as deposit checks that may come in as a result of life insurance or any other reason. Under some circumstances, an executor does not need to open a new bank account but must ensure that he does not co-mingle his funds with that of the estate. The executor is the main contact for creditors who are trying to collect on a debt. Additionally, the executor is responsible for contacting the creditors to inform them of the death of the debtor and arranging payment.
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Liens
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Liens are attached to property to ensure the creditor will recover a debt. In most cases, a lien is not granted unless the creditor gets a judgment in court. The Internal Revenue Service can get a lien without going to court. Other creditors will have to file suit against the estate of the deceased rather than in the name of the deceased.
Result of a Lien
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When a lien is filed against property, it prevents the transfer of a title, meaning the house cannot be sold until the debt is paid. It is possible to sell the home and have the lien paid out from the proceeds but a check will be immediately withdrawn from the proceeds of the home. In cases where a spouse continues to live in the home, the lien will not force the sale of the home, but will hinder the future sale of the home.
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References
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