Many people own a home or other property with an outstanding mortgage balance at the time of their death. If you inherit real estate encumbered by a mortgage in Louisiana, you may wonder how the mortgage debt will be paid and if you’re responsible for paying it. Obtaining legal help after inheriting property with an attached mortgage is critical for making the right decisions about this type of inheritance.
How the Mortgage Is Paid
In Louisiana, debts must be paid or provided for after someone dies. That means, the mortgage must be satisfied, but it does not mean that the entire mortgage balance must be paid in full before the property is transferred to your name.
It would be cost-prohibitive for most people to have to pay an outstanding mortgage balance immediately. If the law required the mortgage to be paid off before ownership transferred, the property would be less likely to pass through succession and more likely to be owned by the bank after the mortgage holder dies.
The decedent may have provided a way to pay off the mortgage debt in the will. In that case, anyone who inherits the property may not need to worry about the mortgage. However, many decedents don’t have the financial resources to satisfy the mortgage, so heirs have other options, including:
- Paying the mortgage. Generally, the person who inherits the house becomes responsible for the mortgage and must continue to make regular payments. The payments should be made on the same schedule and in the same amount as they were before the decedent died. You should continue to make mortgage payments even if you intend to sell the property. If you stop paying the mortgage, the lender may start foreclosure procedures that interfere with your right to sell the property. Additionally, you should let the lender know that the mortgage holder died, and you inherited the property and intend to continue making payments. If you can’t make the mortgage payments, you may talk to the lender to see if the terms of the mortgage can be renegotiated.
- Selling the house. Sometimes, heirs decide that selling the house is the best option. You may not want the property, or the property may have been left to multiple people, and you don’t want the complications of shared ownership. If you decide to sell the property, the mortgage will be paid from the purchase price, and any extra money will be distributed to the heir(s) who inherited the property.
- Refusing the inheritance. You have the right to refuse the inheritance. If you do this, you do not have to pay the mortgage, but you also give up all of your rights to the property, including any profit from the sale of the property.
Different rules may apply if the mortgage had a co-signor who did not inherit the property but who outlived the decedent. The co-signor may remain responsible for paying the mortgage debt.
Get the Outcome You Want With the Help of a Succession Lawyer
If you inherit property with a mortgage, you have important decisions to make. We encourage you to talk to an experienced Louisiana succession lawyer before you decide to keep the property and pay the mortgage, sell the property, or refuse the inheritance. You deserve to know all of your options and the legal and financial consequences of your decisions.
Our Louisiana probate attorneys can help you navigate all aspects of the succession process whether your loved one died with a will or intestate. Our goal is to make the probate process as easy and cost-effective as possible. Contact us today by phone or our online form to schedule an initial consultation about your legal options.