What happens to their mortgage debt after a person dies?

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What happens to their mortgage debt after a person dies?

I am interested in buying an estate home of a friend who died. She had a lot of debt including a mortgage and I don’t believe there was a Will. She died 4 months ago and her mother 10 days later. Both lived in the house; her mother’s name was on the deed and mortgage. I’m not sure how much debt was her’s and how much was her mother’s but it totaled to an amount that the family doesn’t see the worth of putting the house on the market. I would like to approach them to buy it but with the debt that’s owed I don’t know if I would have to take on their debt to do so. Can I buy it at a reasonable price? I want the house, but I don’t want her creditors to be able to take it from me after I purchase it.

Asked on May 14, 2012 under Estate Planning, Michigan

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

What will happen here is that the bank will foreclose and sell the property at auction.  Why would they sell it to you at less than the mortgage with out bank approval and waiver of the deficiency?  Then the estate and probably the executor would be liable for the shortage.  I think that you need to wait and see how things shake out. If the house can be sold at market value and it covers all the debt then that is what has to be done.  If your offer is indeed reasonable and will cover the bills then make it.  Good luck.


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