Biggest Concerns When a Probate Includes a Property in Foreclosure Proceedings
Family deaths are never easy. Not only are you faced with loss, but you’re often faced with having to sort through the legal process necessary to settle an estate. One large asset that is normally included in a will is a house. Since houses are so substantial in terms of both costs and contracts (i.e. mortgages), the probate process surrounding homes can get tricky, especially if the home is in foreclosure. If you’re experiencing a situation where you’re a potential beneficiary of a home that is being foreclosed, here is some advice to help you through this difficult process:
Understand the probate process
The first step to navigating the wills process is understanding what probate is and what it entails. The probate timeline can last from several months to several years, so the sooner you familiarize yourself with what you need to do, the better. Probate is the legal process through which a dead person’s property is properly distributed and debts are resolved.
What happens when a home in probate is in foreclosure?
When a lender sees that a mortgage is in default, they take action, regardless of why the borrower is missing payments. Often times, if enough payments are missed, the home will go into foreclosure. Assuming that the original owner was widowed or was the only one on the mortgage, it’s up to the beneficiary to make up for the debt if they are appointed and they desire to own the property.
If the home was in foreclosure prior to the probate process, then it will continue to stay in foreclosure even as probate proceeds. A home in probate can also go into foreclosure if the executor fails to make sure the mortgage payments are met.
What options are available?
Depending on the situation of the beneficiary and what they want to do with the house, there are several routes to take. First, the beneficiary needs to contact the bank or lender to come up with a plan to settle the debts. This can either be via out of pocket expense, selling the house if the value of the home is greater than the initial mortgage, or using other assets of the estate as payment. The other option would be to let the house go under foreclosure, which would mean giving up rights to the property. This option is smart if the debt is too deep or if the beneficiary simply cannot pay off the loan.
Should you hire an attorney?
Whether or not you should hire an attorney really depends on your situation. If you’re in a complex situation, then we recommend hiring one. They can help you negotiate with creditors so that you can secure the property without having to take on an unmanageable burden. If you plan on selling the property, hire a probate real estate agent to assist you with assessing the property and navigating the selling process.