Property Inheritance

[MichaelF]

What is the name of your state? Nevada

My step-dad died a week ago. Before he died, he told me that I am in his will, and that he was leaving me the mobile home and the acre of land it is on, which I've been renting from him for the past 6 1/2 years. The only other person named in the will to receive anything is his ex-wife, whom he left $100. The rest of the estate (in excess of 3/4 of a million $$$) is to go to his selected charity. My uncle is the executor of the will, but has not been left anything in the will.

My step-dad had paid-off the land which this mobile home is on long before I moved here. It had been purchased in 1990. When I wanted to move to Pahrump (in 2000), he purchased this mobile home and had it installed on this property. He did not pay for the mobile home in full. He bought it on mortgage. A couple of years ago, when interest rates were low, he re-mortgaged this house. At this point, I do not yet know if he only mortgaged the remaining balance, or whether he took-out a larger mortgage to get some cash. I know he was going through some financial difficulties at the time due to his divorce.

Last year, both of his elderly parents died, leaving him a great deal of money, which is why his estate is now so large. Their house still is not sold, has a value of about $250,000, and had been paid in full. His house is worth about $400,000, and was paid in full after his folks died. He has about $125,000 in stock investments. Unfortunately, for some reason, he did not pay-off the mortgage on this mobile home.

Now that you have the background, my question is:

If it is not specified in the will, what is to happen with the mortgage on this house? Logic tells me that it should be paid by the estate before it is given to me, since it is one of his debts, but my uncle seems to be under the impression that it will NOT be paid by estate and that I will either need to transfer the mortgage to my name or will have to take out a new mortgage. This just does not make sense to me, since there is MORE than enough money in the estate to pay the debt.

Your help on this matter would be greatly appreciated.What is the name of your state?

 

[MichaelF]

I just found this:

NRS 133.155 Specific devise passes subject to mortgage or lien existing on date of death. A specific devise passes subject to any mortgage or lien existing on the date of death, without right of exoneration, regardless of a general directive in the will to pay debts.

Does this mean that I'm screwed, and that the estate will not pay-off the mortgage?

Does this mean that if my stepdad took-out a mortgage which got him extra cash that I am now responsible for the "upside-down" loan?

 

[colourfastt]

I just found this:

NRS 133.155 Specific devise passes subject to mortgage or lien existing on date of death. A specific devise passes subject to any mortgage or lien existing on the date of death, without right of exoneration, regardless of a general directive in the will to pay debts.

Does this mean that I'm screwed, and that the estate will not pay-off the mortgage?

Does this mean that if my stepdad took-out a mortgage which got him extra cash that I am now responsible for the "upside-down" loan?

If a devise passes subject to a lien (mortgage) then the lien stays with the devise. The person inheriting the devise is responsible for the lien and in most cases the lien holder can demand full payment on the lien.

 

[MichaelF]

Hmmmm, that's more or less what I figured it meant.

This house was $50,000 new. Over the past 6 1/2 years, my payments have totalled over $40,000. My uncle (the executor) said that he thinks he saw a figure of $48,000 on the mortgage, but he wasn't sure if that was the current amount owed or not. So, if my stepdad refinanced the house and borrowed extra cash in doing so, I can now be held responsible for paying the debt? No mortgage company would lend me $48k on a house worth $30-35,000.

If that is the case, do I have the right to refuse to take the inheritance of the house, yet still inherit the parcel of land, which is paid-in-full with no liens and which was not used to secure the mortgage? I'd rather just take the land and tell "the estate" to come and take "their" mobile home off of MY land. The land, alone, is worth over $100k.

 

[nextwife]

Hmmmm, that's more or less what I figured it meant.

This house was $50,000 new. Over the past 6 1/2 years, my payments have totalled over $40,000. My uncle (the executor) said that he thinks he saw a figure of $48,000 on the mortgage, but he wasn't sure if that was the current amount owed or not. So, if my stepdad refinanced the house and borrowed extra cash in doing so, I can now be held responsible for paying the debt? No mortgage company would lend me $48k on a house worth $30-35,000.

If that is the case, do I have the right to refuse to take the inheritance of the house, yet still inherit the parcel of land, which is paid-in-full with no liens and which was not used to secure the mortgage? I'd rather just take the land and tell "the estate" to come and take "their" mobile home off of MY land. The land, alone, is worth over $100k.

You'd need to know exactly what the current mortgage is secured by. Obtain a copy of the mortgage and see if the land is inmcluded. Also, what recource the lender has in the event of a default on the mobile home and whether they can lien the land (if not already included) or it is cross collateralized.

FYI- it is MORE common for the heir inheriting real estate to inherit WITH the existing mortgage, rather than the estate paying off the mortgage first. I do tons of property closings every year, and virtually always see properties obtained by inheritance were inhertited WITH the mortgage remaining in place.

 

[MichaelF]

You'd need to know exactly what the current mortgage is secured by. Obtain a copy of the mortgage and see if the land is inmcluded. Also, what recource the lender has in the event of a default on the mobile home and whether they can lien the land (if not already included) or it is cross collateralized.

If I were to disclaim the mobile home, it would default back to the estate, in which case the mortgage would simply be a debt, and be paid-off. The home would then be auctioned, with the profits (pennies on the dollar) going to the charity. This way, the estate loses tens of thousands of dollars instead of ME paying almost double what the house is worth. How the mortgage was secured would be irrelevant since there is plenty of money in the estate to pay-off the mortgage. I would then have the option to either sell the land or put a new house or mobile home on it.

FYI- it is MORE common for the heir inheriting real estate to inherit WITH the existing mortgage, rather than the estate paying off the mortgage first. I do tons of property closings every year, and virtually always see properties obtained by inheritance were inhertited WITH the mortgage remaining in place.

I can understand that "the norm" would be that the mortgage remains, since most people would have paid it off when they were alive if they had the money. However, in this case, my stepdad simply did not give this situation enough thought before he died, so he did not realize the trouble this would cause. He could have paid it off at any time. I have no doubt that he MEANT for this house to be paid-off when he died, but he did not make provisions for it in the will, so I'm screwed. Three quarters of a million dollars will go to charity, while the small portion that I was intended to receive can not be fully exercised, due to the technicallity. The only glimmer of hope that I can think-of is that he may have had the fore-sight to have insured the mortgage note in the event of his death. I'm going to look into that tomorrow.

 

[nextwife]

If I were to disclaim the mobile home, it would default back to the estate, in which case the mortgage would simply be a debt, and be paid-off. T

No, if the mortgage is not HELD by the estate, the mortgage defaults and the mobile home and whatever the mortgage covers reverts to the MORTGAGE HOLDER, whomever that is.

It is a debt secured by an asset, and that asset can be returned to the mortgage holder. Who are the mortgage payments made to? THAT is the party that will get the home if there is a payment default and foreclosure. The estate does NOT have to pay off the mortgage at all. So do your homeowrk and obtain a copy of the mortgage to verify to whom the collateral reverts in the event of a default. and whether the land was cross collateralized on the loan - because you could lose that if it is.

 

[MichaelF]

I see what you are saying.

Let me make sure that I understand this, as it applies to this situation:

If my stepdad used this land as collateral for this house's mortgage, then I'm pretty much screwed, and will be forced to assume the $48,000 debt (if I don't want to lose the land).

My uncle is the executor of the will. Until this is all settled, he will continue to pay all of the bills for the estate, ensuring that all bills are paid on time. This house will not fall into forclosure while this situation is being sorted-out. If this land was not used as collateral for this house, and I choose to disclaim the house and move out of it, then whether or not the estate pays the mortgage or not AFTER that time will be of no consequence to me. Is that correct?

My uncle will be in town next week, at which time I should be able to get a copy of the will and this house's mortgage papers. *Fingers crossed* that he didn't use the land as collateral.