Short sale provides more time in the home

Q. We have been trying to do a short sale on our house that is badly under water. The bank has now offered us something called a "deed in lieu of foreclosure." What is this and would it be smart for us to accept their offer?

A. Every situation is different and I would recommend you speak to a real estate attorney familiar with these proceedings prior to making a decision. However, in general, the deed in lieu of foreclosure is simple, fast and you are assured no deficiency judgment will be entered against you. The impact on your credit score is probably similar for both options.

Once you find a purchaser, short sales can take a long time to get approved, though this seems to be getting better. The advantage to the short sale is you will probably be able to retain possession of the property longer, allowing you to better save for what comes next. Once you agree to the deed in lieu, the bank will probably want possession within 30 to 60 days.

Q. My mom passed away last year and I am now ready to try and sell her house. A real estate agent I spoke to told me I needed to open an estate to be able to sell the house, as the house is not in my name. I remember, though, my mom telling me she has a living trust that will make it easier to sell the house when she's gone. How do I go about finding out about this living trust and if I do locate this, will it be easier to sell?

A. When one creates a living trust, they generally name a trustee of the trust, which is usually the party creating the trust. The trustee has control of the assets conveyed into the trust. In most cases, the creator (also known as settlor) of the trust also names one or two successor trustees. These parties are designated to carry out the provisions of the trust once the creator of the trust has passed away.

So, who do you think your mom may have named as the successor trustee? Start calling people. If you are aware of who prepared the trust, call that party. If your mom had a regular attorney, call him or her. If your mom had a safe-deposit box, look there. Also, look anywhere mom kept important papers.

You need to locate a copy of the trust agreement and determine who was named the successor trustee. The trust agreement will provide who is entitled to the house and the successor trustee will be required to take whatever action necessary to satisfy this provision.

Presuming you do locate a copy of the trust agreement, it should be fairly routine to convey the property to you and allow you to do what you wish. Another option would be to have the successor trustee sell the property and tender the proceeds to you, presuming the trust agreement passes the property to you.

If you fail to locate a copy of the trust and mom had a will, the house will pass per the terms of the will. Absent a will or trust, the house would pass per the intestacy statute of the state where the property is located. In Illinois, that would mean half of sale proceeds go to a spouse and half to children (or, for example, if there is a spouse and three children, half to the spouse and one-sixth to each child).

So, if your mom was not married at the time of her death, you and any siblings would share in the ownership of the property in equal shares.

• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to tdr100@hotmail.com or call (847) 359-8983.