FAQ: What happens if I inherit a house with a mortgage?

As a starting point, the heirs or beneficiaries of the decedent do not automatically become liable for the decedent’s mortgage loan.  The unpaid balance of the loan is a debt of the decedent, and is a claim against the estate of the decedent.

However, the house remains bound by the mortgage, and you inherit the house subject to that mortgage.  So although you may not be obligated to pay the mortgage loan, the lender can still foreclose on the house and take it from you if the mortgage loan is not paid.

In reality, many lenders will continue to accept payments from the heirs or beneficiaries for quite some time before declaring a default.  That gives most people time to either sell the house or refinance it.  However, it is best to do this during the estate administration so that there is an appointed personal representative who has the legal authority to communicate with the lender about the mortgage loan and to request payoff statements.

The same concepts apply to any real property, house or otherwise.

If you have specific questions about your situation, please contact us.

Posted in Estate Planning Law, Real Estate Law