Are you a beneficiary of a West Palm Beach will? Did a relative just leave you the beach house in Pompano Springs? It might be subject to a mortgage though! Do you know if you have a right to make the personal representative pay that out of estate funds? In the old days this was the default do you know the rules now? Check out a recent case on mortgages out of West Palm Beach.
Property Subject to Mortgages
- What happens when you inherit real property that is subject to a mortgage?
- A mortgage is a secured loan that is secured by real property i.e. land.
- When you do not pay the loan, they have a right to foreclose on the land and take it.
- So what benefit is there to an inheritance that you cannot afford the payments on?
- That type of logic is not the norm though, as more and more states are making it so that you take the land subject to the mortgage.
- This means it is your job to pay it or they can foreclose.
- Do not stress too much, you would not be personally liable for any deficiency.
- That being said you could lose the land.
- In the old days it was considered the standard rule that the personal representative would pay off all debts of the estate including that pesky mortgage so that you took the land free and clear.
- Why did the law change?
- What happens if you cannot afford that mortgage payment?
- You may be able to refinance, you may also need to just sell the property and take the profits after you pay off the mortgage.
- Did you know that the mortgage may be unenforceable?
- Check out this case out of the Third District Court of Appeal in Miami.
Perry & Company v. CRSJ Inc.
- This was an appeal from a foreclosure proceeding that was denied after it was found that the mortgage was unenforceable.
- Do you know why it was unenforceable?
- Maybe the property you took subject to a mortgage also has an unenforceable mortgage or other encumbrance attached.
- The mortgage had matured and the lender had not done anything to enforce the debt for five years.
- In Florida especially West Palm Beach if you snooze you lose, courts do not like litigants that sleep on their rights and let a cause go stale.
- If you inherit property make sure to check for liens, mortgages and other encumbrances.
- Also do some due diligence and check on the validity of all these encumbrances!
- It might pay off in the long run!
Want to learn more?
Check out the entire case by clicking here.