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  1. #1
    Join Date
    Sep 2008
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    California
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    6

    Default Property Transfer in Probate and Mortgage Implications

    My question involves estate proceedings in the state of: Hawaii

    Hello, we are beginning to deal with the real estate of our deceased father who had no will or trust. He had properties in Hawaii, Oregon, Missouri and Washington.

    Most properties have substantial mortgages with some equity. A handful are paid off but those are worth very little. One property is $100k underwater. While one has substantial equity. When we add up the estimated value of the real estate and minus their debt there is money left over.

    At the moment we are in limbo with mortgages payments now 2 month overdue and we are unable to pay with estate money because the executor has not yet been approved by the Hawaii probate court. Likely we will have to use our own money to keep it afloat until then.

    The eventual executor, a son, plans to quit claim or transfer property in probate with each heir taking responsibility for whatever debt the property received has attached. He says the property would be in the heir's name but the mortgage can stay in our father's name. I'm not convinced the mortgage can stay in the estate name after reading other posts.

    Is this possible? Can an heir refuse property quit claimed to them? Can a property be refinanced by an heir? What might happen if we allow the underwater property to foreclose? How vulnerable to creditors would the other heirs be if one falls behind on payments?

    Any thoughts are appreciated.
    Thanks

  2. #2

    Default Re: Property Transfer in Probate and Mortgage Implications

    A mortgage follows the property. If you allow a propety to foreclose, they will have a claim against the estate. The mortgages cannot stay in his name, he is dead. Any heir can disclaim his portion of the estate.

  3. #3
    Join Date
    Dec 2007
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    Ohio
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    Default Re: Property Transfer in Probate and Mortgage Implications

    Someone needs to educate the son. Consult an independant attorney for advisement.

  4. #4
    Join Date
    Sep 2008
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    California
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    Default Re: Property Transfer in Probate and Mortgage Implications

    Thanks guys!

    An attorney has told us that it is possible to transfer property in probate. But the mortgages are another matter. I suppose the banks would rather take their chances with refinancing an heir than accept a foreclosure or go after the rest of the estate?

    The attorney did say that in Hawaii even if property is transferred and ownership changed the debt can be traced back to the estate. This means that if heir #1 defaults they can go after the other heirs especially the one who has sold his inherited real estate for cash?

    This all seems like we have to put money into a risky gamble to see anything can be recovered from a debt-laden estate?

    Thanks for the input. I cannot convince the executor to hire an attorney full-time.

  5. #5
    Join Date
    Dec 2007
    Location
    Ohio
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    Default Re: Property Transfer in Probate and Mortgage Implications

    I suppose the banks would rather take their chances with refinancing an heir than accept a foreclosure or go after the rest of the estate?
    The bank would of course prefer to refiance in an heirs name. But it can also go after the estate.
    The attorney did say that in Hawaii even if property is transferred and ownership changed the debt can be traced back to the estate.
    To my knowledge, this isn't specific to Hawaii....
    He needs to also understand the LEGAL responsiblities that he has and will be held accountable for as an executor.
    Thanks for the input. I cannot convince the executor to hire an attorney full-time.
    Then try and convince him to CONSULT one. What does he really have to lose?

  6. #6
    Join Date
    Sep 2008
    Location
    California
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    Default Re: Property Transfer in Probate and Mortgage Implications

    Thanks gigirle! We have consulted with a Hawaii attorney to get the basics. The more info I can collect here helps make a case with the other heirs for investing in an independent attorney.

    May I trouble you all with a few more follow-up questions:

    * When can properties of an estate be distributed to the heirs?

    * Can the current mortgage be transferred to me without the long qualification process? The loan amount is large, do I have to qualify?

    * What does it mean when a lender places a claim on the estate? Can properties be distributed while there is a claim on the estate? Can we clear this claim by assigning it to an heir?

    * If we have two heirs and two properties. One property is transferred to each heir. If one property with large debt goes into foreclosure, can that event effect the other property.

    Thanks!

  7. #7
    Join Date
    Dec 2007
    Location
    Ohio
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    Default Re: Property Transfer in Probate and Mortgage Implications

    When can properties of an estate be distributed to the heirs?
    Generally when the judge says it can.
    * Can the current mortgage be transferred to me without the long qualification process? The loan amount is large, do I have to qualify?
    Ah, it's going to be just like any other mortgage loan. I don't know what your financial situation is. It may be a good idea to contact your bank to see if you pre qualify. And yes, you will have to qualify for a loan to get one.
    * What does it mean when a lender places a claim on the estate? Can properties be distributed while there is a claim on the estate? Can we clear this claim by assigning it to an heir?
    That means the lender gets his money first before anything can be done with the estate.
    The properties can't be distributed with a lein unless the lein is satisified. I don't know what your asking about in that last part.
    * If we have two heirs and two properties. One property is transferred to each heir. If one property with large debt goes into foreclosure, can that event effect the other property.
    YES! The bank will use the first house to get it's money from the first house.

    Maybe I'm missing what your saying this is what I'm understanding.. (just example)
    house a - no mortgage and worth 500,000
    house b - 250,000 in mortgage and worth 500,000
    house c - same as b
    house d - 150,000 in mortgage and worth 100,000
    house e - about to be in foreclosure and in the negative

    Once the estate is probated all of the mortgages and net worth will come out in the open. The court will order that the estate be settled meaning that all outstanding debt (medical and credit card bill etc) be paid. If there is money to cover everything then the houses will need to be transfered etc. But if what your trying to ask is....can everyone get a house and let the bank foreclose on house d and e, it's not likely going to happen. the bank should go after the estate for it's money. Until all the mess is straightened out, the court shouldn't allow any of the property transfers.

    There are many scenerios here that could affect the probate...how the houses were deeded, etc.
    This is very complicated and involves many banks, states and people as well. Please your advice shouldn't be coming from an internet forum but an attorney. If you have a vested interest as an heir, then please feel free to hire your own attorney to protect your interest.

  8. #8
    Join Date
    Sep 2008
    Location
    California
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    Default Re: Property Transfer in Probate and Mortgage Implications

    Many thanks!

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