UPDATED: Oct 1, 2022
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My mother has passed away and I am the sole heir to her estate. She had a boyfriend and she quitclaimed a property to a boyfriend but still has an outstanding loan on it. If the loan defaults and is only in her name, can the bank take the property back since it seems the loan isn’t backed by the house. It would seem her estate is liable but can the property be taken since it isn’t in her name?
Asked on July 25, 2018 under Real Estate Law, Oregon
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 4 years ago | Contributor
Yes, if the loan is not paid, the bank can foreclose even though she allegedly quitclaimed the deed. You legally cannot transfer a property without paying off an existing mortgage; the asserted transfer is void and can be reversed or undone and the bank foreclose. (It can also be undone and the bank reach the property because this would be seen as a transfer made to defraud or cheat, a creditor, the bank, and such transfers are considered to be fraudulent.) The bank can also sue her estate if it chooses--either instead of foreclosing, or after foreclosing, for any amounts not paid by the proceeds of the foreclosure sale.
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