Joint Tenancy With Rights Of Survivorship Should Not Trigger Due On Sale Clause With Death Of Co-Owner

Q: My aunt and I owned my house by joint tenancy with rights of survivorship. She has since passed away.

When we bought the property, my credit wasn’t very good so she got the mortgage in her name. She never lived in the house. I have made all the payments.

Can the mortgage company call in the mortgage and take the house away from me? I am desperate and do not know what my rights are. Please help. It seems no one can give me a straight answer.

I have faxed the necessary documents to the lender but cannot get a straight answer there either. They keep telling me they have not received the documents. I have faxed them twice. I asked a lawyer and he was no help.

A: You should be able to have received the property that you already co-owned and continue paying on the mortgage. Often, lenders will, and in some circumstances by law must, allow family members who inherit the property to keep the property without triggering a due on sale clause – that is the provision in the loan documents that gives the lender the right to call the loan in and require the owner of the home to pay off the loan when the home is sold or title to the home is transferred.

According to Fannie Mae, the company does not require the servicer on a loan to enforce a due on sale clause when one of the co-owners of the property has died and the other co-owner becomes the sole owner of the property and continues to live in the property thereafter.

They also do not require the servicer to enforce the due on sale clause when there is a transfer upon the death of an owner of a property to a relative or spouse and that relative or spouse will live in the property or and when the owner of a property transfers his or her home into a living trust.

Fannie Mae owns, controls or has the ability to determine the rules on a large percentage of loans in the United States and many other loan services handle their loans in line with Fannie Mae guidelines. If your loan is serviced by a lender under these guidelines, you should be fine, especially if you live in the home and will continue to live in the home as your primary residence.

Please call the local bar association and discuss the matter with the chair of the real estate committee and ask for a referral to an attorney who can help.