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So You Inherited a Home in Foreclosure – Now What?

We all know that we will not get out of this life alive, neither our loved ones.  Any day we will receive a call announcing a death in the family and you may also hear that you inherited property, perhaps the home where the deceased once lived.  Despite our grief, it is unavoidable to feel excited hearing we inherited a house … but this excitement could go away so quickly, let’s see …  You know that you have to go to the deceased person’s home and organize the house and his personal property.  All the sudden you find documents among his personal belognings that show that the house is in foreclosure and now you wonder how that is going to affect you, Will you have to pay the bank any money that was owed on the mortgage?  Will you have to hire a foreclosure attorney to help you? What options do you have?

Option No 1:  Refuse the inheritance.  In Florida you do not inherit the debt of a deceased person, so don’t panic, you don’t have to accept this home and you can just let it go into foreclosure.  The bank performing the foreclosure will auction the house and the proceeds of the sale will be used to pay off the debt.  If there is a shortage of funds, the bank will write it off as a loss.

Option No 2:  Short Sale.  A Short Sale is a process where the owner of the house sells it for less than what he owes to the bank or a lien holder.  In this case the housse is sold on the open market and when the seller, in this case the personal representative, accepts an offer, this offer has to be submitted to the bank for them to approve it.  If the bank approves the sales price, the seller will sign the closing papers and the sale will be finished.  What is the advantage of taking this option?  there is no advantage, but in some cases, the deceased person’s family wants to do the right thing to honor the memory of their family member.  This would be a very simple process for the seller because very little paperwork will be involved and it doesn’t cost the seller anything.

In conclusion, a Short Sale could be a good alternative, but there is not any benefit for the heirs since they will not receive anything after the sh finishes.  You will have to decide which option you will take depending on your principles.

The information presented here does not pretend to be legal advice and It is recommended to consult with an attorney to determine the legal implication of any decision you make.

 

 

 

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