Inherited A Home With A Mortgage
May 25, 2019
By: Stanley Lemorin
A mortgage on a property is considered a lien on the property. As a result, the holder of the mortgage has a secured interest in the property to secure the debt that was used to purchase the property.
Florida falls under the Lien Theory, which means the holder of the mortgage has the right to foreclose on the property to recover the loan amount. § 697.02, Fla.Sta.(2018).
The property owner holds title to the property by virtue of a deed. The property owner has the right to dispose of the property subject to any liens on the property.If the property owner validly disposes of the property by will and the property has a valid mortgage, then the person that inherits the property will hold a valid title to the property and the holder of the mortgage will retain a lien on the property.
The only way to extinguish a mortgage on a property is to pay it in full and obtain a Satisfaction of the Mortgage by the holder of the mortgage, which must be recorded within 45 days of full payment of the mortgage. § 701.03, Fla. Sta.(2018). Furthermore, the holder of the mortgage can accelerate the mortgage and require the mortgage be paid in full upon notice the property will be devise to a third party.
If you inherit a property subject to a mortgage you have two options: you can sale the property to cover the cost of the mortgage and retain the remainder of the proceeds of the sale, or negotiate with the mortgage holder to assume the mortgage and continue to make payments on the mortgage.
If you have any question about inherited property subject to a mortgage please feel free to contact The Legal Advocate to further discuss.