What are my rights regarding an inherited property and foreclosure?

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What are my rights regarding an inherited property and foreclosure?

My aunt and I inherited the home from my late mother. Neither of us is on the loan, and I have fallen behind on the mortgage payments. The aunt doesn’t want to pay the expenses and she is pushing me to sell the home so she can have her 50%. However, the house is our home and is sentimental to me, and we have a 6-year old daughter. Now the mortgage company will not let me catch up because I can’t pay the full balance in 1 lump sum and also because I’m not on the loan. I have bad credit so I

may not qualify to get on the loan. Does the mortgage company have to work with me because I inherited the house? Are they obligated to continue to accept my catch-up payments even if not in full?

Is my aunt obligated to pay anything? She’s not on the loan either. In the event of a sale, can I use the payments I’ve made as an offset to any proceeds we have to split?

Asked on January 21, 2017 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

No, the mortgage company does not "have to work with" you because you inherited the home: they are entitled to their money. The mortgage comes due in full when the mortgagor (your mother) passes away: either you pay the mortgage, or they can foreclose. Either you, your aunt, or both of your together must pay off (or refianance in your own names) the mortgage to avoid foreclosure. If you don't, the lender can take the home. If you sell, first you pay the costs of sale (e.g. any realtor commission or other expenses of sale); then you pay off the mortgage; then you and you and aunt split the proceeds. You  cannot automatically receive a credit for the payments you've made, but if your aunt does not voluntarily let you have more to compensate for those payments, you could sue her in court and seek a court order directing that you receive a larger share due to having footed the costs. It is not guaranteed that a court would rule in your favor, but there is a reasonable chance you'd get extra money.


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