Family can take over mortgage when father dies
Q. I have a 30-year fixed mortgage with about 20 years left and a balance of around $200,000 still on my home. My grown son (and executor of my estate) lives with me, pays rent and does most of the yardwork. My grown daughter is married and lives in another city.
I would like to rewrite my will to leave the house to my son and name my daughter as full beneficiary to my life insurance policy ($200,000). I have discussed this with both of them and have their blessings.
My question is: Once I die, will my son be required to refinance the mortgage that is in my name, or can he just continue paying on the existing mortgage and get the deed name changed? Also, should I go ahead and put his name on my deed?
A. Lenders do not call in a mortgage loan when real estate is inherited. Your son can keep the present financing if he wants to.
If you wanted your son to be co-owner now, you would sign a new deed naming the two of you. But it sounds as if you want to leave it to him when you die. If that's the case, just saying so in your will is the way to do it.
Q. Does the existence of a mortgage on the property cause the bank or other mortgage holder to limit one's ability to include another person on the deed?
My wife and I am currently joint owners of our home with right of survival. We have a remaining mortgage balance of about 30% of estimated market value.
I would like to include my grown son on the deed with my wife and me. Thanks for your advice.
A. You and your wife each made a personal promise to repay that loan. (Either of you, by the way, could potentially be held responsible for the whole amount.) In addition, you gave the lender permission to take your home if the loan wasn't repaid as promised.
None of that would change if you added another owner, and you're free to do so.
Q. If today I were selling my house, which is in good condition, and the contract allows a buyer's home inspection, is there any law that says I must correct problems found? My feeling is, "Sure, go ahead, but I'm not moving on my price, nor am I fixing anything that isn't required by law. If you don't want it, go away." I feel that I can sell this good property and that anything that really needs fixing has already been repaired.
A. As so often, the answer is a firm "It all depends." In this case, it depends on the terms of the purchase contract you would probably have signed before the buyers brought in their inspector. You might have agreed in the contract to spend up to a given amount if repairs were required by the buyer's lending institution. If repairs were going to cost more than that, you could refuse to make them, the buyers wouldn't get the loan and -- again depending on what it said in the contract -- the deal would probably die at that point.
It's also usual for buyers to have the right to drop out completely if they don't like their inspector's report. If they threatened to do that, you could stand on your rights, but again, you'd lose the sale and be back to square one. And you'd have more information about problems you'd be legally obligated to reveal to the next prospective buyers.
Q. My husband and I own a four-person family apartment building and have been considering selling it. How do I calculate the taxes on the sale? Could you provide me with an example of how to calculate this?
A. I don't know how much depreciation you have claimed, or could have claimed, as an expense while the property was rented. I don't know if you live in one of the units. I don't know if you'd be taking back financing. All of those things make a difference. As a real estate investor, you should certainly have had your own accountant all along. You need to get your information from a professional who can sit down with you and discuss the whole situation.
• Contact Edith Lank on www.askedith.com, or 240 Hemingway Drive, Rochester NY 14620.
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