My Dad passed away in Dec. 2011. The house has a mortgage on it, and it was transferred to me through beneficiary deed. I have had it up for sale since Jan. 2012, with no avail. Someone is now interested in doing a contract for deed with it. First, can I do this with a balance still owed on the home, and secondly, what do I have to file to start this? I am hearing I need an affidavit of death. What else?
Commercial Real Estate Attorney
you are now the owner; to clarify title, you need to file an appropriate affidavit of death. As owner you have the right to enter into any contract regarding the property. Keep in mind that you are not personally liable on the mortgage and if the house is now equal to the debt on the mortgage you can stop making payments and let the lender foreclose without fear they can come back to you. If you think you can get the mortgage paid off and ultimately get some equity out of the house, you really should use an attorney to prepare a contract for deed.
This comment does not create an attorney-client relationship. The law and its application by the courts is constantly evolving and changing. This discussion is not to be taken as a definitive guide, and should not be relied upon to determine all fact situations. Each set of facts must be examined separately with the current case and statutory law analyzed and applied accordingly.
Yes, you should be able to do this. In my state, you would file a death certificate to remove your father from the deed. You would also record a memorandum of land contract to reflect the new contract for sale. The actual paperwork should be prepared by an attorney. It should not be overly expensive. Having the attorney do this will ensure it is done right, and could head off a lot of potential problems, down the road.
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You need to have an attorney review the mortgage to make sure that the due on sale clause would not be triggered with a contract for deed transaction. This is important to get the advice of a good attorney.
Estate Planning Attorney
Yes, you will need an affidavit of death. However, be careful. This may trigger an acceleration clause making the totality of the note due. Remember, the bank didn't give you a loan, the contract was with your dad. Have all of your "ducks in a row" first. If the balance exceeds the contract price, find a realtor who specializes in distressed property sales and approach the bank about a short sale. There appear to be a lot of issues here and you certainly need to seek a corresponding level of professional assistance.
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