If my dad died, what happens to mortgage in his name on house that he owned with my sister as JTWROS?

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If my dad died, what happens to mortgage in his name on house that he owned with my sister as JTWROS?

I am PR. Because of her credit she can’t refinance. She thinks she can take over payments but what if she defaults? How can I be sure I will never be held liable if she defaults? He has another house owned free and clear. Will the mortgage holder want his mortgage payed off when this goes through probate?

Asked on November 1, 2011 under Estate Planning, Michigan

Answers:

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

Answered 9 years ago | Contributor

I think that you are doing a bit of anticipatory "estate planning" here, correct?  It happens often - even between spouses - where the joint owner of the property is not on the mortgage.   And although every mortgage has what is known as a "due on sale" clause that could be seen relevant here, the Federal Law carves out an exception to a bank or mortgage holder being able to call in the mortgage note in this particular type of situation.  This is a transfer by operation of law - the property does not pass through probate - and so your sister can indeed continue to keep paying the mortgage in your Father's name. She takes it subject to the mortgage.  I can surely understand your being concerned and maybe it would be a good idea to discuss with your father mortgage insurance that will pay off the mortgage when he passes.  Seek some help here from an estate planning person.  Good luck. 

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If your father passed away and title to a home he had was with your sister as a joint tenant, she owns the property by operation of law and takes title to it subject to the mortgage. If she cannot service the mortgage, she could very well lose it in a foreclosure. You will not be responsible for the mortgage if you never signed the loan documents for the home you are writing about.

Perhaps she could rent out the property and use the rentals to pay its debt load.


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