Assuming a Land Contract

What is the name of your state? What is the name of your state? Nebraska

Background: My brother recently died, naming me as his personal representative. His estate is small. His two offspring, aged 21 and 25, are to inherit the estate in equal shares. Each of his two offspring were named as direct beneficiaries (in equal shares) on his life insurance, 401(k), and other work-related benefit plans. The amount each will receive in cash and/or IRA rollovers is significant. Because they are direct beneficiaries, none of the money from these benefits goes into the estate.

Problem: The offspring want to keep the house my brother purchased on a land contract less than two years before his death. There isn't enough money in the estate to pay off the land contract. (The note holders haven't filed a claim against the estate anyway.) My brother's offspring do not want to take out a bank loan or use any of their cash and/or IRAs to pay off the amount remaining on the land contract. Instead, they want to make the monthly payment on the note for the next 28 years (or, presumably, until they decide to dispose of the house) without going through any sort of legal process.

Questions: Can someone simply continue making the monthly payment on a deceased person's contract? Can the estate be closed before the outstanding note is paid off? What are my legal obligations, if any, to the people who in good faith let my brother buy a house on a land contract because he couldn't get a bank loan? This is making me crazy, and I would appreciate any help you might be able to give.

No, unless the contract specifies that they can, they can not simply continue making the monthly payment on the deceased person’s contract. I believe the estate must liquidate the property and pay the debt or make arrangements with the party to the contract to renegotiate the terms so the heirs can make the payments. Another possibility is for them to refinance the loan commercially and pay off the lender. But by all means, don’t try and close the estate before this is taken care of or you could end up with personal liability. If you can’t get the parties to agree on a new arrangement, see a lawyer about how you should handle it to protect yourself from liability.

Thanks for your help. I feel much better now. FYI, I do have an attorney. I will ask him why he thinks it's OK for the kids to continue paying on the contract my deceased brother signed.