Estate
REM #LAW805
By Ilyce R. Glink and Samuel J. Tamkin
Summary: Parents inherit a house from their son. He did not have a will and so the family is unsure how to settle his estate. What will it take to keep the house, especially with house values declining? To keep the house part of the estate, the parents will need to keep paying the mortgage, taxes and insurance. To make the right decision, the family needs to fully understand the assets in the estate.
Q: My brother recently died and did not have a will. My parents are left with his house in Colorado which has a mortgage. Given the current mortgage crisis, they were told yesterday that the value of the home has gone down drastically and they may be better off deeding it back to the bank since there would be a balance to pay at closing.
Are my parents’ only options to sell the property or allow the bank to foreclose on the home? What if they want to keep the house?
A: Our condolences on your loss. In dealing with the estate of your brother, your parents need to decide whether to try to keep the house or let it go.
Your parents could keep the house but they would have to make all of the payments on the mortgage, real estate taxes and insurance, as well as make sure the home is maintained. If your parents feel that the home will be worth substantially more in a couple of years, they should keep it, try to rent it, and see what the real estate market does at that time.
If they are not inclined to keep up those payments or don't see the value of the home increasing for some time, then they could try to sell the home with the hope that it will bring in more money than is owed on it. Their other option is to stop payments to the lender and let the bank foreclose on the home.
In general, if your brother's only asset was the home, the bank would not be able to get any additional money owed to it from other family members. So, your parents wouldn't be on the hook to repay the balance of the mortgage.
Start by figuring out what your brother owned and what he owed at the time of his death. If he truly owned nothing but the house, and your parents don't want to keep the property, foreclosure might be a good alternative. For more details, and perhaps other options, please consult with an estate attorney.
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink's latest book is 100 Questions Every First-Time Home Buyer Should Ask. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022, or contact them through Ilyce's website www.thinkglink.com. ©2008 by Ilyce R. Glink and Samuel J. Tamkin. Distributed by Tribune Media Services.
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