Inherited House with Debt

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Inherited House with Debt

I inherited my mother’s house upon her passing, as stipulated in her Will. There is still a mortgage on it and a lot of debt (i.e. liens, judgments, etc.) against it. The total debts of her estate far outweigh the total assets. I have been paying the mortgage on it personally until I figure out what to do. I want to move into the house and somehow own it. How can I accomplish this without me being personally liable for the debts? I read somewhere that if I take ownership of the house get the mortgage/deed in my name then the debt transfers with the house but not me personally, and if I ever sell the house the debts would have to be paid. Is this true? I have not begun the probable process yet.

Asked on July 4, 2018 under Estate Planning, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You can't "transfer" the debt--that is, take over or assume the mortgage--without bank or lender approval with any mortgage that I have ever seen; mortgages from commercial lenders have "no assumption" clauses barring someone else from taking over the mortgage. Furthermore, the mortage must be paid to transfer title. So the way to take ownership of the house is to pay off the existing mortgage either in cash (if you can) or with a new mortgage (to in essence refinance it). If you can't do that, you can't take ownership--you have to eliminate the existing mortgage. The same goes for other liens--you have to pay them off to take ownerhip. You are not personally responsible for the existing debt on the house, not being a signatory to the mortgage and not being subject of the existing judgments, lients, etc.; if the various liens, mortgages, etc. exceed the equity in the home, you are far better off NOT trying to pay them down in order to own the house. Rather, stop paying these debts which you do not owe in any event and let the creditors/lenders foreclose and fight over the scapes (whatever equity there is) while you buy a new home, free and clear of other people's debts.


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