How do we walk away clean from my late mother’s highly mortgaged but valueless condo?
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How do we walk away clean from my late mother’s highly mortgaged but valueless condo?
My mother recently passed away. She had a large equity loan on her condo through her bank. Now the amount of the loan greatly exceeds the value of the condo. My sister and I are not co-signers on the loan or anything else; we are not on the deed for the condo. However, the condo is in her trust of which we are both included. How do we walk away from this clean without any legal or financial repercussions?
Asked on April 19, 2012 under Estate Planning, Nevada
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
If the loan on your mother's condominium was "purchase money," meaning used to acquire it, most likely the state that the property is in has anti-deficiency laws where if the property is foreclosed upon there is no recourse as to the borrower even if it goes into foreclosure. In order to ascertain the status of the loan on the property you are writing about, you should consult with a Wills and trust attorney that practices real estate law.
You need to bring the original loan documentaiton, deed, and mortgage (trust deed) to the lawyer. If the loan is purchase money, then you can let the condominium go into foreclosure without any recourse to the trust that your mother set up.
Ascertaining the type of loan, "purchase money" or not for the condominium is the first thing that needs to be ascertained to try and resolve the situation you are writing about.
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